3. Company overview
Five forces analysis
can be both evolutionary and revolutionary. Market keep growing with rise of
demand, which as we all know is unlimited. Demand single handedly cannot
control the market growth there are various other factors contributing. The
tremendous growth of technology which improved communication, distribution,
supply chain, production all together ends up creating the market we see today..
Marketing is now completely about customers, attaining new ones and retaining
the current ones. It is said that making a new customer is way more expensive
than maintaining the current ones. So now every company concentrates on
creating a long term relationship with the customer. Many a time’s marketing is
mistaken as just advertising, but the fact is advertising is just a technique
for marketing. For success of any company it is not only important to know how
to sell but mostly it should focus more on what to make , so for this it is
necessary to know the customers their needs and wants.
Marketing is all about understanding in depth
that customer satisfaction is very very very very important and marketing gives
various ways to channel the activities to create strong customer relation. So
what might be the factors influencing the strategies of a company in marketing?
What might be the tools used by companies to comprehend their target market?
Are they useful? so studying a company’s marketing environment, its policies
,market plan can provide an insight about such concepts. In this context to
study on these areas Toyota Motor Corporation has been chosen. A well known legend
in the motor industry, which has built its platform on customer satisfaction
thus, a right choice to study on marketing details. Starting off with company
overview to critically analyzed new marketing mix.
Toyota Motor Corporation
is the automobile leader and a well known, largest company in the world. it is a Japanese company
founded in 1937, Toyota
Motor Corporation engages in the design, manufacture, assembly, and sale of
passenger cars, minivans, commercial vehicles, and related parts and
accessories(Thembani Nkomo,2013). Toyota is well known for its quality
practices, the production system and customer loyalty. Toyota motors was founded
by Kiichiro Toyoda and has it’s headquarter in Aichi, Japan( Osama
Alshehri,2016).with more than 340
employees all across the globe.
Vision and philosophy-Toyota
follows certain guiding principle adding on to its image of innovative and
sustainable brand and believes in forces that power sustainable growth and
strives for improvement in the lives of customers and
society(Toyoda,2017).President and representative director Akio Toyoda is
optimistic on the future of Toyota and
he is ready to face all the challenges.
The vehicle list consists of MPVs/vans, SUVs, commercial vehicles, hybrid
vehicles, plug in hybrid, fuel cell. Toyota keeps in mind that times changes so
does the mode of transport, they innovate products with high level of fun,
flexibility and freedom of travel. Toyota Motor Corporation is a pioneer in the
automobile industry with wide range of products at affordable cost. This
company has been successful in maintaining a consistent customer satisfaction
Analysis – Automobile Industry
For any strategy to be fruitful it is
necessary to have a complete knowledge about market scenario and new trends.
Automobile industry with immense opportunities as well as challenges .evolving
from past decades with many ups and downs .this industry depends on the fuel
prices ,per capita disposable income of consumers. This industry has seen a
tremendous growth with a global sales of
90 million in 2016 and around 92 million in 2017(mike wall ihsmarkit,2017).for
the coming years this industry is found to revolve around the dilemma of digitalization
that is a fusion of automobile and digital world which quite challenging for
the companies. The changing consumer demands which now shows interests in
battery electric vehicles, autonomous & self driving cars, connectivity,
digitalization. so these key trends make it necessary to concentrate on both
technological& emerging connectivity and digitalization obsession of the society. Customer expectation has always
been high for this industry which demands for different unique selling
proposition compared to other industries. There is a rich history of providing
improved products which acts as the backbone of the industry success .political
and economic instabilities are the other factors with are influential to growth
and survival .According to global automotive survey 2017 was a year of
political hell with free trade agreement changes, emission regulations, more
import restrictions that can have a major impact. Different parts of world pose
different challenges like production requirement in western Europe, innovation
in china, political changes in middle east which in turn create the demand for
new strategies. Export rate touched more than 3, 00,000 units in 2016 and it
increased by 8.8% in 2017 where around 3,29000 units were exported (ETAuto,
2017)..In such an evolving and challenging industry, Toyota group always
manages to be in successful podium for past years and there is a consistent
effort and innovation from the group to maintain it.
companies in the industry
Toyota, Volkswagen, BMW, Honda group.
The past statistics have shown how Toyota
group maintain its strong brand image with increased customer loyalty, revenue
and sales. Toyota held a valued position
among the consumers in 2016 with reported revenue of around 28 million. This
success is entirely due to the skilled manufacturing system, healthy supplier
relationship, strong organizational structure, and efficient supply chain and
based view –Toyota
has a efficient manufacturing system which is well admired for its material and
inventory system .it’s well flourished value chain, relationship with suppliers
ensure that the inventory reaches the plant at proper time .Toyota makes more
profit than its competitors because of its strong linkage with suppliers.
Toyota positions itself as cost effective
brand in the minds of consumers with innovative product development feature.
Toyota has something to cater every type of customer. Toyota is known for its
differentiation strategy with proper marketing and advertising back up .Toyota
comes with perfect taglines for each of its products like Toyota GT86 with “grab the steering and
feel the excitement”, Toyota avanza with “smart in style’. Toyota is well
recognized for its supreme design and quality. Due to several competitive
advantages gained through features like hybrid vehicles Toyota have been
successful in creating strong brand.
Toyota is being positioned as a reliable
brand with impressive performance. it is called a reliable brand because
everyone can expect at least one product at their affordable level. Toyota
understands that fact that not everyone are blessed with a high disposable
income, so being a customer conscious brand Toyota make use of this fact and
manufactures variety of products that that can be in the list each automobile
love irrespective of being rich or middleclass. So this makes it possible that
every consumer can not only dream but can buy a Toyota car in real.
In this way Toyota owns a wide range of
products in the industry positioning it has a reliable affordable, supreme
quality brand and most importantly it never committed the mistake of over
positioning like many other automobile brands.
market- Toyota targets
upper middle class and high income groups. Family size is a high priority while
designing products for middleclass. Sporty cars are designed for youngsters and
high income groups.
As Toyota focus on the consumer satisfaction
and buying traits it could said there is focus to demographic and psychographic
segmentation. Demographic traits being family size, age, income is taken for
mainly upper middle class. People with same demographic traits may have
different psychographic traits like lifestyle, tastes preferences etc which can
be influential for high income groups.
USP OF TOYOTA GROUP
unique selling proposition revolves around its high quality product with
sustainable brand image which is attributed by the lean manufacturing system .this has given a competitive advantage
and a market leadership.
these are set of characteristics that a
company should focus while creating products which makes it unique and hard to
copy by other organization thus adding to the competitive advantage (prahlad,
hamel, 1990).Toyota’s core competence lies in its ability to produce innovative
products according to need and trend of the market .one such example is TOYOTA
PRIUS a electric and hybrid car giving a tough competition to the rivals
including BMW. This fast fuel saving car with hybrid is a best-selling unique
product which is now being copied by the competitors.
Other than the TPS Toyota believes in the
benefits of moving forward due to which Toyota comes up with novel products,
keeping up with the advances in technology. customer service is another well
remarked policy increasing customer loyalty.
The marketing audit is a gives well defined
description and examination of company’s, overall attributes contributing to
both positive and negatives sides of the firm, it includes all strategies,
action plans, problems in both internal and external environment.(Philip
kotler, 1999). The marketing audit of Toyota is going to open up the marketing
environment, marketing strategies, action plans are the soul part of this company.
Before implementing any strategies it is necessary to understand the strengths,
weakness, threats and opportunities of the corporation. Various methods could
be used to analyze the above parameters there is SWOT analysis. This rate
critically about factors relevant to understand about the overall growth
problems faced, goals achieved new limits to be set, other opportunities left
unexplored. Having a thoroughly analyzed SWOT plan can aggregates all
information regarding the success of various strategies which can be further
used in future for modifications to the firm. A large company like Toyota
requires a well sorted SWOT analysis.
Ø Strong brand image
Ø High reputation
Ø A wide array of products
Ø Lean manufacturing system
Ø Customer loyalty
Ø High brand equity
Ø World class equipments
Ø High employee rate
Ø Efficient supply chain
Ø Linkages with suppliers
challenges in the industry like digitalization in automobile industry
for rapid innovation
demand for fuel efficient vehicles
income of upper middleclass
in global market like Japan
instability in various markets
It is an internal strategic attribute. These
factors included in strength are entirely dependent on internal environment. As
mentioned before Toyota has a very strong well maintained internal structure
that helps it to gain all the mentioned factors. This proves the capability of
the firm to consistently perform well in market. The firm should always work in
order increase the strength. In a very competitive market this will help in
order to sustain. There is always another side for the coin we also is of
importance so the weakness are natural but are not to be ignored a company like
Toyota comes up with various action plans in order to overcome all weakness.
Even a simple unnoticed error can be highly expensive because customers will
easily get persuaded by these weakness to go for other brands so weaknesses
are to be rectified with shorter lead
Markets always open up with new opportunities
that can be completely exploited by a company like Toyota. A leading manufacturer
like Toyota can easily make use such opportunities. Increasing demand of hybrid
cars and fuel efficient vehicles are a smooth sea to be sailed on for Toyota
more than competitors because of the technical support, high class engineering
which are some of the strengths of Toyota. As the target group includes the
upper middleclass people the increase their disposable income can thus bring
new colors to product portfolio and sales. Threats mainly are the ones that are
being faced globally by the automobile corporations. Consumers without any
doubt will evolve their needs change wants increase, economic, political
situations in various markets are also not predictable still by experiences
from past decades it will to better to be prepared for such a adverse situations. There are competitive
firms like Honda group, BMW in race with competitive advantages.
The external environment is mainly the source
of threats which make it necessary to study about the external forces affecting
the company it can be both positive and negative. This makes up the macro
environment of the company. As a pioneer in the global market it is important
to strategize according to various changes in different domestic market.
each factors some are opportunities whereas others being threats, as mentioned
earlier automobile industry is both a hostile and friendly industry to dwell.
So political stability can be a opportunity but not all markets provide such
perks. Improved and easy markets with no
political tension can actually stimulate growth of the market as well as the
company so such market should identified in each financial year like Japan’s
improved reforms through free trade agreement can help in focusing on the
market penetration. Export and import trends of the company can be highly
influenced by the economic fluctuations in the markets. Developing countries
emerge with new opportunities at the same time both developing and developed
countries being the extremes of economy requires different strategic plan. So
while planning and implementing the economic differences and instabilities are
of major importance. The era of digitalization demands differ from the typical
ones of the industry, but the technological advances provide backup commerce
advances are also a opportunity to which saves manual power, space, fast
communication. Improving the mobile apps can open a set of opportunities for
Toyota Corporation. All these factors contribute to the external environment of
Toyota. Until now Toyota has taken care of all the factors efficiently.
FIVE FORCES ANALYSIS
This analysis gives the competitive forces
exerted on the company from the external environment. This is called as the
porter’s model. This tool is necessary for the strategy formulation. External
forces exerted on Toyota by the automobile industry is being categorized and
analyzed by this model. This gives a detailed report on the overall market attractiveness.
The five forces analyzed are:-
Ø Bargaining strength of suppliers
Ø Bargaining nature of buyers
Ø Rivalry in the market
Ø Power of new entrants
Bargaining strength of suppliers- low to nil
Toyota has a wide linkage with suppliers all
over the globe, being a large company it is not difficult to find new suppliers
and engage in business with them, so the power of supplier to exert any kind of
pressure on the company is very low to nil. The size of a company like Toyota
is enormous compared to the strength of suppliers’ .even if there is some issue
regarding any of the suppliers Toyota can easily switch to others and no
supplier will ever do so as losing a firm like Toyota will be a big mistake for
Bargaining nature of customers-highly
Customers are well-informed about various brands,
models of vehicle available, and their prices. So there are plenty of options
available for customers. Customers are being persuaded through various
advertisements and marketing tactics of competitive firms on a daily basis.
Customers have the complete freedom to choose; to retain the customer is
difficult at the same time very important.
Toyota has been successful in creating loyal customers still the
competitive nature of industry always poses a hidden threat, the technical
efficiency being a competitive advantage has been a perk for Toyota, still coin
can flip anytime so this force will always be ruling the company’s strategic
Rivalry in the market-increases yearly
Automobile industry even though oligopolistic
in nature as the number firms are limited but the competition is intense.
Rivals like the Honda group, Volkswagen also have the competitive advantages in
industry .All the companies are coming up with the product innovation with high
R support. Technological back up is also increasing, the automobile
industry promotes the survival of fittest the quality expectations are very
high and many of them cannot be compromised like safety requirements. So
various action plans are necessary to shine among the rivals.
As the industry require high investments with
technical support along with high customer equity the industry do not provide
ease of entry. It is not easy for new entrants to compete with a firm like Toyota
as the survival of those firms are first of all in threat. The strong brand
image of Toyota was not gained out of one day but it was built through years so
new entrants within a short span of time cannot pose threat to Toyota.
Low costly substitutes are always preferred
by consumers. Price of a product is always compared with all the available
substitutes, like one among the target
group of Toyota- upper middleclass May also go for public transport which is
low costly compared to a private
vehicles, similarly with other brand products. Understanding this Toyota has
launched affordable vehicles for such medium income that shows high frequency
to go for the substitutes. . This has a moderate effect because availability of
substitutes are limited. Sustainable and fuel efficient models of vehicles can
minimize this threat.
This can provide different ways by which the
components of a corporation can be blended in order to achieve the target,
objectives, and yearly goals. This can be called as the foundation based on
which the marketing activities are being designed.This model is designed with
the components that are soul of marketing a product.
All these attributes together called as 4Ps. All
the four as always is analyzed from the consumer point of view, the features to
be included for the product according to customer needs and wants. ease of
availability , supply chain management, distribution system, acceptable pricing
,the communication of the product is very crucial it creates the awareness,
interest for the product
New marketing mix for Toyota
offers wide range of products including
MPVs/vans, fuel cell, passenger cars, sports car, commercial vehicle but the
demand for hybrid cars which Toyota started addressing from 1997 is still
creating a buzz as the demand goes on increasing so this competitive advantage
is to be continued. Toyota prius is a unique feature that as mentioned earlier
is being copied by the competing firm. Instead of just increasing the length of
the product line, it would be highly interesting and worthy to concentrate on
the current trend of connectivity and digitalization, as per the global
automotive executive survey 2017 the current trend and challenge is fusion of
digital world and the automotive world, battery electric vehicles are found to
be leading for past two years. Understanding this it will be better to go with
the flow add more BEVs to product line of Toyota .Autonomous driving and power
train technology are other trends forecasted by the executives globally.
Toyota provides vehicles at almost various
price ranges so that customers of all types get satisfied. The lean manufacturing
system helps in reducing the production
cost as it manages the surplus inventory; raw material use etc. The price range
starts from $19,000 to $85,000.More offers like cash back policy attract more customers.
The pricing strategy of Toyota needs to be on mainly two strategy value
oriented pricing and market based pricing .Based on the market demands and
competitors this can be done the market environment being oligopolistic
competitive pricing strategy is very important. Similarly a value based pricing
can help pricing according to value placed on the product.
Making the product available at proper time
is very important. Toyota has efficient dealership and distribution pattern
that helps in keeping the customers at ease of availability. The retail
management can be made stronger as customer service store operations are
getting more and more popular so innovative retail system can be more worthy. Toyota
has around 190 distributors all around the globe, with more than 2000 sales
outlets. The efficiency of sales staff is one of the major plus point helping
in improving the sales with high knowledge in sales ,customer interaction, data
The promotional activities being the personnel
selling, sales promotion, advertising makeup the promotion strategy.
Advertising can be made more innovative even though the tag line are already
very famous. Internet ,word of mouth, magazines, celebrity endorsement have
generally been the source of advertising. Promotional activities increasing the
sales volume should always be given more importance.