EXECUTIVE SUMMARY
This Assignment will be based on Toyota Corporation in relation to the various aspects of their business; |I will present a co-relation of Generic Marketing with Toyota. |This presentation will also reflect the recent issues of the Accelerator Pedals on most of the Toyota vehicles Globally, Toyotas brand image has been majorly affected, and also the decision of recalling all Vehicles to fix the defect and Ensure Customer Safety will be of huge cost to the company.
What is marketing?
In General Terms “MARKETING” refers to what an organization must do to create and exchange value with customers (What is Marketing? 2006 By Alvin J Silk, Harvard Business school, Section: Introduction- Page 7)
My personal definition of marketing is to showcase your product in a way that is appealing to the consumers that you are trying to sell .There are various definitions to Marketing, however the two that I found closely related to my point of view are below:
First Definition – marketing consists of the strategies and tactics used to identify, create and maintain satisfying relationships with customers that result in value for both the customer and the marketer. In this theory marketing is the process of planning and executing the pricing, promotion, and distribution of goods, ideas, and services to create exchanges that satisfy individual and organizational goals (www.knowthis.com).
Marketing is essential for organizational success. I believe that marketing informs consumers of the products that an organization is offering. Without marketing there can be no success because if consumers do not know about the products and services being offered they won’t know where to buy the product or even if the product will help them.
It is also important because it increases revenue. Marketing catches the consumer’s attention therefore making them want to invest time and money. In addition marketing also helps other businesses learn about potential partnerships that may exist. No business can be successful without some form of marketing.
Brief Introduction about Toyota.
Toyota is Japanese corporation founded in 1919, they built their first motor in 1936 since then Toyota has grown exponentially within a period of 70 years to become the world’s 3rd largest car manufacture of the world.
The United Kingdom has been a key market for Toyota, in terms of sales and manufacturing as a part of their European Strategy
The company has invested greatly in developing engines and technologies which address environmental concerns and the issue of diminishing resources.
SITUATION ANALYSIS
SWOT Analysis for Toyota
Strengths:
Toyota has made large investments in setting up factories in the US and China, which saw their net profit rise by 0.8% to 1.17 trillion yen ($11bn) which was against the global motor industry. The markets stated that the reason for the same was the perfect blend of products for the markets it exists in. This was a perfect example of dedicated targeting, segmentation and positioning in the markets
Toyota took over Ford from the second position as the world’s largest car maker with about 6.78million units. Toyota servers a large segment of the market, it manufactures vehicles for private, business customer and also commercial customers. The company has made itself a house hold name in its industry. They also maximize their profits by implementing high quality standards and being eco friendly by designing affordable hybrid vehicles.
Weaknesses:
A Large Global organization comes with its own share of issues and problems. With so many different car markets and the world being a global market, every car maker want to get a large piece of the pie which has lead to be an over supply of cars and to fight this issue the car makers need to build vehicles that are preferred by the consumer. Toyota markets most of its vehicles in the US and Japan, This could be critical as the fluctuation economic condition could have them exposed due to exchange rates, which can reduce their margins to a high level.
The Downturn in the economy has affect all car manufactures, globally, Though the sales were not high as forecasted the company has to keep producing cards in order to retain its operational efficiency, Though a few manufacturing units were shut down around the world, it represents a huge investment in fixed cost.
The Recent Event of the defects of the Accelerator pedals which has affected the Toyotas goodwill, is also a major weakness, which has compromised Customer safety, this brings out the fact that the quality and the test has not been given the highest importance, also identify the same at such a later stage will be a huge cost to the company to recall the cars to repair and service the defect, which will increase cost and hit profits negatively.
Opportunies:
Toyota has taken large steps towards manufacturing eco friendly vehicles and its effort has created a reputations for its self. Toyota prius and Lexus RX400h Hybrid are developed on new hybrid technologies. Rocketing oil price have shot up the sales eco friendly cars. Toyota’s dedication and investment in research and development of Hybrid technology has taken them a step ahead of other car manufactures, they have sold some of their hybrid technology to other car manufactures like Ford.
Threats:
Product recall for Car Manufactures are commonly heard of, in 2005 the company had recalled 880,00 sports utility and pick up trucks due to faulty front suspension systems.
A Recent 8 million Vehicles were recalled due to the Faulty accelerator pedal, The Company also has to pay a fine of $16.4 million for failing to report defects indentified in some of the vehicles.
The Car market is a competitive market; there is competition from either a new entrant in the market or an existing car maker with new designs and Car. These above issues can move a loyal customer to another brand that can benefit with the bad press of Toyota, better car prices. They are also exposed to any movement in the price of raw material.
MARKETING STARATEGY FOR THE COMPANY.
Understanding the various SWOTS in Toyota, I have co-related some of the best Generic practices to Toyota
Marketing Strategy:
The Central Role of Marketing in the business initiates from the fact that Marketing is a process by which a firm/ Business / Organisation creates value for its chosen customers. Value is created by meeting customer needs
The firm must define itself not by the product it sells but by the customer benefits provided with the products/ services marketed.
Having created a value/ Benefit for its customers the business/ organization can capture a portion of that value through pricing. This should be an ongoing process of being viable and must sustain the process of creating and capturing value over time.
Marketing strategy involves 2 major activities:
Selecting a Target Market and determining the desired positioning of the product with the targeted customers
Designing a plan of marketing activities to achieve the desired position of the product.
Figure below presents a Schematic describing a general process of marketing strategy development.
Schematic of Marketing Process:
Toyota’s Marketing strategy has been very simple, it has been based around the consumer, their safety and the environment.
1. Environment
Continuously seeking methods to cutting Carbon foot print by reducing Greenhouse gas emission, use of water and volatile organic Compound emission to minimize the ecological impact of Toyota’s manufacturing
2. Market
To make worth for money vehicles for consumers.
To make sure vehicles act in accordance to the high standards of commuter and pedestrian wellbeing.
To make certain vehicles abide by the uppermost ecological performance standards and cut impact on the surroundings.
Toyota’s vehicles are sold through a Wide dealer network; in the UK Toyota’s has a network of about 200 dealers nationally.
Toyota works very closely with its dealer network, since they being the first point of sales contact for their customers, to ensure a standardized balance of high service are met and the brand values are correctly developed and displayed, thus building relationships with support and inspiration to work efficiently and successfully with their customer base.
This has resulted in Toyota achieving record sales for the last 10 years successively.
Going the Extra Mile
Toyota organized and set up an autonomous research to recognize the manner of surroundings that appeals to the majority of clients and how they like to be
Served by sales staff. The outcome of the research was that many clients found showrooms unapproachable and unfriendly and that they rather wish to have their own time to check and understand the product prior to being approached by the sales team member.
The above factors were vital to the improvement of The Toyota Experience, a new retail model in retail area design that was launched in 2001 – 2005 across the UK
A new appealing and engaging sense had been created with retail area hosts with a Hotel style service, where the client was welcomed with a drink and refreshments and are then directed to vehicles on display and information desk. The Sales team is only available when more information was required or a test drive was needed
Particular consideration has also been paid to ambience and the ergonomics which had a direct impact to the atmosphere, provision were in place for familes who visited the retail center with children with a play aread available for the children. Sales desk were designed in curved booths to provide even more privacy when discussing sales and purchase conditions with Sales Staff. All retail outlets has undergone a major transformation to display the status and reputation of the brand that is associated with luxury and relaxation.
Toyota’s Plan of Market Segmentation.
Target Marketing and Product Positioning:
Marketing strategy development revolves round the customer and the type, kind of product we are marketing.
The prerequisite to the development for the entire Marketing strategy are the specific details of the target markets the firm/ Organisation will server
Firms/ Organisations can target large mass markets to specification of smaller segments with customized marketing strategies.
Organisation/ Firms must determine the most appropriate way to describe and differentiate and the level of customization its ready to offer to their customers based on factors like, Mass Market- Market segments-Market Niches- Individuals, this process is known as SEGMENTATION.
Most widely known ways of Market Segmentation are based on:
� Demographic (e.g. Age, Income, Gender, Occupation)
� Geographic (e.g. Nation, region of the country, Urban Vs Rural)
� Life Style (e.g. hedonistic vs. Value Oriented)
The above types are used as bases of Segmentation. Useful segmentation of market is derived by using the segmentation base to match the customer’s behavior or relationship to the Product to their needs.
Marketing Mix:
Marketing Mix guide the way marketers think, to channel energies into specific areas and to address the needs and wants of the consumers.
We live in a customer – driven economy and satisfying customer needs means increase and continuous business. Market concept has changed over the years in response to shifts in the consumer base and in other economic factors.
The Business/ sellers must need to understand their customer considering the various marketing mix.
They need to be fully aware of the customer’s present market and also potential future markets.
Thorough research into the customer’s market and operations is crucial to understanding the customer’s “value chain.” This is more challenging for smaller businesses since they have fewer resources than larger businesses. (This is changing, however, as more electronic data interchange systems are being developed for small businesses) (Sellers and Furth 201).
TOYOTA BUSINESS CENTRES
Toyota Business Centres was launched in 2003, These Centers offer sales, servicing and repairs. This was specially designed to meet the specific needs to the business customers. These centers were well networked and were located in prime locations,
A Centre covered a bigger area than a single retail dealer and dealt with both cars and light commercial vehicles. Benefits of this business network included flexible opening hours for servicing, quicker turn around time to business.
MARKETING PORTAL
Toyota retails and business centers were supported and benefited from a leading Marketing Portal. Which blended the communication and custom made marketing service.
Toyota divided this service into 4 specific areas.
– Marketing Mall – A online one stop shop service, this marketing service would bring together all the centers and Outlets, so that the entire Toyota network can plan and implement all aspects of a campaign, integrating with Toyota (GB) PLC’s national marketing programmes. This would save time, money and would be a quicker and effective way and transmitting across updates to all locations in a standardized manner. This service would also benefit the customer to find all dealers and Business centers under one roof and can have the flexibility and various options.
– Info Centre – An information section that provides supporting information to the materials found in the Marketing Mall, as well as information on National communications including press ads, radio commercials and TV ads. This would help in providing the larger picture about Toyota to the Dealer and Business centers, thus helping them to serve the customers better.
– Website – The website division provides Centres and Outlets with a high level of personalization from Welcome text to offers and information to events, so that websites can be individualized.
– Admin – The Admin segment accumulates information that is displayed on the Centre and Outlet websites that is used on the Marketing Mall order forms. This process makes ordering easier by pre-populating applicable information from previously entered details.
Financial projections:
The Recent recall of will cost the Toyota 100 billion yen ($1.1 billion) and will the operating profit, to spread the risk Toyota has staged a planned recall over the third and fourth quarter of the fiscal year ending March, 2010.
Based on the Facts, Toyota will expect to cut about sales of 100,000 vehicles a day globally of which 80,000 would have been North America. These estimates could possibly change the financial projections.
Toyota posted a profit that was better than expected for the last quarter for three months ending 31 December 2009. Compared to a loss of 164.64 billion yen in the same quarter a year prior.
Notice Concerning Revision of Financial Forecast for FY2010
Toyota Industries Corporation today announced a revision of its financial forecast for FY2010 (April 1, 2009 through March 31, 2010), from that announced on October 30, 2009, as follows:
1. Revision of financial forecast
1) Revision of consolidated financial forecast for FY2010
(April 1, 2009 through March 31, 2010)
(Amount: million yen)
| Net sales | Operating income | Ordinary income | Net income | Net income per share | |
| Previous forecast (A) | 1,390,000 | 10,000 | 18,000 | 4,500 | 14.44 |
| Revised forecast (B) | 1,390,000 | 18,000 | 26,000 | 12,000 | 38.51 |
| Amount changed (B-A) | – | 8,000 | 8,000 | 7,500 | — |
| % of change | – | 80.0% | 44.4% | 166.7% | — |
| (Reference) Actual results for FY2009 |
1,584,252 | -6,621 | 14,343 | -32,767 | -105.16 |
2) Revision of non-consolidated financial forecast for FY2010
(April 1, 2009 through March 31, 2010)
(Amount: million yen)
| Net sales | Operating income | Ordinary income | Net income | Net income per share | |
| Previous forecast (A) | 900,000 | 8,000 | 16,000 | 12,000 | 38.51 |
| Revised forecast (B) | 900,000 | 13,000 | 19,000 | 14,500 | 46.54 |
| Amount changed (B-A) | – | 5,000 | 3,000 | 2,500 | — |
| % of change | – | 62.5% | 18.8% | 20.8% | — |
| (Reference) Actual results for FY2009 |
940,008 | -9,780 | 20,387 | -2,705 | -8.68 |
2. Reasons for revision
Based on the effects of expense and cost reduction measures exceeding targets, Toyota Industries Corporation revised the financial forecast for FY2010 as above.
The projections are based on exchange rates of ¥90 = US$1 and ¥130 =€1 for the remainder of the fiscal year.
IMPLEMENTAION CONTROLS
In January of 2006 Toyota revisited the Toyota Product Development System (TPDS) and the unexpected levels of competence it achieved in the advancement process-close to four times that of the usual North American auto company.
Suppliers that are more highly developed in their execution of the Toyota Production System (aka “lean manufacturing”) will normally have an easier time implementing the TPDS than other suppliers. Nonetheless, there are still significant challenges the majority of suppliers, even individuals with more superior lean systems, will visage when they move to execute the Toyota Product Development System. Some of the key challenges entail:
* A new approach to engineering leadership — A rethinking of engineering organization roles and expertise sets.
* A new approach to knowledge management — New systems for storing, accessing and using engineering data.
* A new approach to design variations — Execution of set-based synchronized engineering.
* A new approach to the expansion progression- Less attention on process standards and more attention on product standards and design outcome.
The above systems can only be executed with a refined understanding management system in place. Without which it is impossible to manage the intricacy of the information desired to formulate the choices between the several combinations of options. Like all knowledge management systems, there requires several years of input. Local suppliers will need to put in a long-term commitment for the necessary systems to be in place before the generation of productivity benefits of the systems.
Conclusion:
From the above presentation and information, it is clearly seen and unstated that the operations and the manufacturing of a corporation, particularly of the Toyota Company are reliant upon various financially viable indicators in its arena. These financial indicators command the decisions and the operations of the company, and one way or another determine its achievement in the marketplace.
The recent recall has had a huge impact on the image for Toyota Globally “The head of U.S. operations for Toyota, Jim Lentz “I think it’s a matter of time,” Lentz said. “They’re going to come back. I can’t tell you when. It’s not going to be weeks. It’s going to be measured in months, hopefully not years.”
It is widely accepted that Toyota will eventually move past this recall problem agreed that Toyota will eventually move past its recall issues and have been warned by some experts that they will be out of the league where they enjoyed steady growth. Though Toyota sales forecast has jumped 35% in sales it is very unlikely to attain their 2009 market share. The recession and the immediate recall back event has seen a sharp decline within the first 2 months of 2010. I believe, Toyota’s constant dedication in serving its customers by researching and producing new eco friendly and affordable vehicles will help in retain its position back into the market
BIBLIOGRAPHY.
1. Articles and Chapters from “What is Marketing” – Alvin J Silk, Harvard Business School
2. (What is Marketing? 2006 By Alvin J Silk, Harvard Business school, Part1, Marketing Strategy -Page 4)
3. Articles and notes from: www.da-group.co.uk
4. The development of customization strategies – B Joseph Pine II, Mass Customization (Boston: Harvard Business School Press, 1993) and D. Peppers and M Rogers, The one to one Future (New York: currency/ Double day, 1993)
5. Process of segmentation: V. R Rao and J.H. Steckel, “Segment Markets: Who are the potential buyers?” Analysis of Strategic marketing (Addison-Wesley, 1998), Chapter 2
6. The Concept Of Marketing Mix – N.H Borden, reprinted in Strategic Marketing Management, – R.J.Dolan (Boston: Harvard Business School Press 1991)
7. Financial Projections: http://www.toyota-industries.com/news/2010/100203finance/
8. http://online.wsj.com/article/SB10001424052748704041504575045022882102614.html
9. Marketing Strategy: http://www.toyotauk.com/main/download/pdf/Toyota%20in%20UK%2020ST.pdf
10. Conclusion: http://www.egmcartech.com/2010/03/31/lentz-rebuilding-toyotas-image-will-be-a-tough-process/
11. http://news.bbc.co.uk/1/hi/business/8630447.stm