Table of Contents
Page
Introduction……………………………………………………………………………………..3
PART
A
Marketing
Strategy Adopted…………………………………………………………………..4
Value
Creation…………………………………………………………………………………...7
Strengths
of the Marketing Strategies………………………………………………………….8
Weaknesses
of the Marketing Strategy………………………………………………………..10
PART
B
Strategic
Approach for Increasing Profitability……………………………………………...11
Increasing
the Market Share…………………………………………………………………..11
Increasing
Sustainability……………………………………………………………………….12
Increasing
Value Creation……………………………………………………………………..13
Conclusion………………………………………………………………………………………14
Bibliography…………………………………………………………………………………….15
Introduction
Over the years, Toyota has
established itself among the leading car manufacturing companies all over the
world. This aspect has been enabled by a very effective and efficient
management style adopted by the organization. Toyota’s management style has
paved way to the establishment of successful marketing strategies. A lot of
factors have contributed to the company’s ability to emerge as a market leader
in this niche. The organization’s market structure cannot be stated with
precision. Some tend to consider it as a monopoly while others view it as an
oligopoly (Spear, 2006).
The monopoly aspect arises due to the company’s dominance in exportation. Going
with the differentiation strategy, the organization has been able to establish
seemingly monopolistic presence in many developing countries. The essence of
oligopoly has been brought about by the presence of other key players like
General Motors and Ford. These companies are believed to collude on various
strategies deployed in different markets that they operate in (Wells, 2010).
The collusion is always aimed at giving each player a share of the profits in
the market, without having to undergo unfair competition. This usually happens
when new brands are being introduced in the market, and their success is not
known. Toyota has been up to the task on all the activities that its
competitors are undertaking. The management team that has been devised takes a
good look at what other companies in the industry are doing. This helps them to
keep in touch with new revelations and remain to be market leaders for as long
as they can.
Despite the success that the company
has had over the years, operating in international markets has always been a challenge.
This is based on the marketing strategies that need to be devised and
differences in consumer preference compared to the local markets. Toyota was
introduced in United States in the year 1965. In mid 1970’s, the company had
already established itself as the best selling import brand in the country. In
1980’s, Toyota started to manufacture vehicles in the country. The aspect was
attributed to the growing market share of the organization. Setting up
manufacturing plants in the country also reduced the costs involved with
importation. By 2006, Toyota had become the second largest car manufacturer all
over the world, and third largest in United States (Onkvisit & Shaw2009).
At the moment, the company is regarded as the number one manufacturer all over
the world. This is based on the sales level and market share that the
organization enjoys. Its existence has proved the importance of an efficient
marketing strategy.
Marketing Strategy Adopted
Among the marketing strategies that
Toyota has established in USA is setting up many branches for distribution
purposes. This strategy has been enabled by setting up a large management team
to oversee the process. Managers involved with products in the branches have
undergone thorough training in their respective fields. Before recruitment,
these managers need to have acquired a certain educational level and marketing
experience derived from previous operations. The managers are required to
deploy competent and skilled workforce in the relevant branches. The
effectiveness of the workforce has come along as good marketing strategy due to
the consumer engagement process
(Orhangazi, 2008). A consumer gets more satisfied when he
or she is dealing with individuals that have good understanding of the product
that they wish to purchase. A workforce that shows any form of reluctance is a
complete turn off to consumers. Through the interactions, individuals working
at the designated branches tend to learn a lot regarding consumer tastes and
preference. It is also easy to understand their general feeling regarding the
products being offered. Their non-verbal cues and responses can be used to get
this information. Once this information is collected, it is presented to the
marketing managers. Through the information it becomes easier to assess what
consumers want. Favorable strategies are devised to help curb the gap that
exists.
Another element of the marketing mix
that the company has adopted is the product line pricing. This is a strategy
devised to separate brands in cost categories. The whole aspect is aimed at
creating essence of quality levels in minds of consumers. For effectiveness,
Toyota has put in sufficient price gaps in between categories so as to inform
potential buyers on the difference in quality. Vehicles found in each line of
production have different features compared to those in other lines of
production (Monden,
2010).
The more the features in one product line, the high the higher the price of the
vehicles involved. The aspect has enabled the company to derive maximum profits.
This is because the organization has the ability of serving consumers with
different tastes and economic abilities in the country. Manufacturing vehicles
that are only favorable to high income earners would be a bad approach. This is
because numerous potential consumers are looked out.
Toyota has also segments its market
to some extent. The segmentation process has taken place based on the income
level disparity that exists in any economy. The high income earners are
provided with heavy vehicles that come along with high price tag and high
levels of fuel consumption. The other divide of the market is opposite of this.
The aim of this segmentation is to ensure that everyone attains the desire of
acquiring a vehicle despite their economic conditions. Recently, the market has
been segmented further to those consumers that want environment friendly
products and those that do not mind. This has been achieved by manufacturing
vehicles that are propelled by electric motors for individuals that are
concerned with conservation of the environment (Maxwell, & Drummond, 2010).
For those that do not care, cars with fuel propelled engine still exist for
them.
On promotional aspects, Toyota has
been spending over $1 billion in its marketing campaigns in United States on
various operational periods. The USA market is competitive based on the players
involved in the industry, hence the need for aggressiveness. Among the
promotional channels utilized is advertising. Toyota advertises its products
through various media outlets. It has chosen to go with the media stations that
have a huge following in the country. This aspect increases the chances of
their advertisements being viewed by a large number of people. These
advertisements are usually aired during prime times. This is that period that many people are
believed to be following certain media programs or live shows. Buying airtime
during this period is usually expensive but the rewards are favorable (Koenig, 2012).
Toyota also makes community building
shows and public relation as part of its promotional strategies. The company
has been involved in numerous projects that involve the community on most
occasions. Among these projects, there has been participation in charitable
organizations and offering promotions of different kinds. The organization
contributes a lot to charities on many occasions. Funds involved usually come
from the organization or fund raising activities (Mendelsohn, 2004). Through this
approach, many people have come to realize the existence of the company. It is
also involved in various developmental projects targeting different groups in
the society. The projects are aimed at improving the lives of the people
involved. Many individuals benefit from the projects and tend to promote the
company’s products. They do this by encouraging their friend or colleagues to
the company’s brands. Toyota also practices some form of personal selling as
its promotional strategy. This is mostly carried on organizations that have
already established themselves. The company approaches these organization and
offer to sell them cars are reduced price. Such organizations buy vehicles in
bulk hence giving them a cut price works best for both parties. They are made
to see the advantages that might accrue as a result of this business
partnership.
The company uses Just in Time
production strategy in its supply chain. So far the strategy has been effective
and worked quite well coupled with the organization’s systems. For some time,
it has worked as a competitive advantage to the company. However, the strategy
also has its disadvantages when analyzed from different perspectives.
Value Creation
Toyota has developed various
strategies that have resulted in value creation. Among the process implemented
was the manufacturing of hybrid vehicles. This was an approach that went very
well with consumers. There are many people out there that are concerned with
the environmental conditions that they live in. Before this realization, vehicle’s
pollution was out of consumers’ control. However, production of hybrid vehicles
by has changed the stance. To this group of consumers, this is a sign of social
responsibility from the company. They seem to be interested in conserving their
health on many aspects. Recent reports have shown that the company’s print has
improved significantly. The level of pollution is significantly low. Such
occurrences tend to bring about consumer loyalty (Doole, & Lowe, 2005).
Establishment of developmental
projects has also come as a value creation mechanism. Many companies do not
give back to the society. This aspect never goes well with consumers. They are
decoyed the chance of interacting with their “business partners.” Toyota’s
involvement in community projects has helped in many individuals in the
society. Some have been able to attain their working levels while others have
been able to pursue further education through these programs. Most children in
the charity organizations have had a rejuvenated hope based on the efforts that
have been brought forward by the organization.
Between 2009 and 2011, Toyota called
back many vehicles that were believed to have some deficiencies. These vehicles
were believed to have different malfunctions including experiences of
unintended acceleration. This was a positive sign on most consumers. Many had
argued that it would distort the company’s image. People of this perception
would have let the scenario to pass, something which would have been disastrous
in the near future. It is the company’s desire to create value and uphold high
standards that contributed to the call back. Consumers have become even more
loyal since they feel secure while utilizing these products (Donoso, 2012).
Strengths of the Marketing
Strategies
The marketing strategies being used
by the organization have some strength elements that make them successful in
day to day operations. To begin with, establishing manufacturing branches in
different parts of the market helps in saving costs. Toyota’s parent company is
based in Japan. As part of its international venture, the organization
established its manufacturing plants in United States. This move has helped on reducing costs that
used to be incurred. Imports duties were very high based on the levy that was
being charged. Consumers are also being served on a timely manner. Delays in
delivery could result in loss of consumers if not properly checked (Castro, 2010).
The aspect has also enabled employment of local personnel to work in these
branches. They have some ideologies and knowledge regarding the people in this
area hence have the ability of establishing favorable relationships with
consumers. Through the interactions, the company is able to get an idea of what
the consumers really want. This way, consumers will also get what they want and
repay the organization back with being loyal to its brand.
Just in Time systems also work as
strength factor in the company. Competitors in the industry are yet to adopt
this system and integrate it into their marketing mix. Being able to uphold
this in Toyota’s supply chain has seen the total costs reduce significantly.
Reduction in total costs has accrued due to reduction in the holding costs. By
using the Just in Time production, every product is manufactured as and when
its demand arises. This means that the company does not have to hold the
inventory before a viable buyer comes around. All the costs involved in holding
such inventory are avoided hence the organization’s profit increase. Consumers
are still served on time Toyota is a technology and innovation driven
organization. It is now possible for them to manufacture a car within 5 days.
Product line pricing has also come
as strength to the organization. The economy has some forms of disparity in it.
It is comprised of high income and low income earners. These groups of
consumers have different tastes and preference. Their choices are curtailed by
their social values and ability to purchase. By using the product line pricing,
Toyota has been able to capture a large market share. This is because it serves
the low income earners and high income earners. As a result, more sales
revenues are realized
(Cooney & Yacobucci, 2007). This contributes to increased
profits. Using the product line pricing also enables in getting more revenues
from the high income earners. Automobile with more features usually go at a
high price. There are those consumers that purchase products since their prices
are high. To them is a matter associating with the brand rather than getting
the true value to their money. Product line pricing has enabled Toyota to set
up this approach so as to entice this type of consumers.
Weaknesses of the Marketing
Strategy
Despite the Just in Time system
working as strength to the organization, it also comes along to be a weakness. When
using Just in Time system, all individuals involved in the process must work efficiently.
Failure on side of operation might derail the process. To some extent, it might
result to temporarily calling a process off. This would amount to delays in the
manufacturing of products. As a result, customer orders are not fulfilled on
time.
Having a large team of management is
also another form of weakness. Establishing numerous branches has come along
with deployment of a large team of management. When the management is large, it
becomes difficult for efficient operations to be initiated. There is a lot of
bureaucracy in each department. An issue
must pass through several stages before it is passed or agreed upon. This might
be detrimental to the organization, more so in the marketing area. This field
is dynamic and changes from time to time. It requires some level of flexibility
in decision making for sufficiency purposes. Derailing the process through
lengthy consultations might result in market failure.
Based on the promotional aspects
that Toyota is adopting, it seems to concentrate more of digital advertising. This
is a weakness since there are individuals that are potential consumers and
might not be reached by the information since they have not embraced
technology. They have opted to remain analogue despite the current trends.
Their own perceptions and desire have prompted this actualization. Concentrating
more on the digital arena, might lock out these consumers (Cameron, 2006).
Strategic Approach for Increasing
Profitability
The automobile industry has a large
market share based on the consumers that derive its products. For this reason,
the market is very competitive since every player wants to get a share from the
market. Profit maximization is the ultimate goal for every organization. For
Toyota to increase its profitability, several strategic approaches should be
devised. Among them is establishing a favorable relationship with the
suppliers. Based on its Justin Time production system, the company tends to put
a lot of pressure on the suppliers. In the long-run, this might affect the
company’s profitability prospects. Creating positive relationships will ensure that
the suppliers bring quality products. This is because they want to work for as
long as possible with the organization. The prices they will charge on the raw
materials will be prudent
(Bowen, 2011). Sometimes when the relationship is not favorable
between these two parties, suppliers tend to inflate the prices of raw
materials. When the prices are favorable, cost is reduced hence the
profitability prospect rises.
The company also needs to adhere to
all the rules and regulations set forward by the government and other relevant
bodies. Most of these are related to environmental matters and vehicle safety. There
is a requirement that the company calls back any vehicles that do not meet the
standard threshold. Failure to meet these requirements might result to high fines.
This would come as an increased cost reducing the levels of profits.
Increasing the Market Share
Increasing the market share is not
an easy task for any organization. For Toyota to attain this, it has to
establish some strategic approaches. Among these approaches would be
manufacturing limited edition vehicles. These are those vehicles that come only
once in a life time. Consumers will always scramble for such products. This is
because most of them like being unique and want products that are limited in
the market. The aspect creates an essence of loyalty since many consumers will
be waiting for such occurrences. They tend to get in touch with the company’s
affairs so as to know when these products are available in the market. As a
result, the company increases its market share since other consumers from the
competitors will be enticed by such offerings (Bell & Morse, 2008).
Toyota should also proceed with its aspects
of enhancing social responsibility towards the consumers. This has been the
company’s blue print ever since its inception. There should be more investments
on research and analysis process. This will improve the innovation prospects of
the organization. Through the research it will also be easy to identify what
consumers want and make available to them. To consumers, it feels when a
business understands and upholds their needs. The consumers will keep on
recommending the company’s brands to their colleagues and friends that have not
embraced them. In the long-run, Toyota will keep on increasing its market
share.
Increasing Sustainability
For Toyota to increase sustainability
there is need to establish favorable organizational culture and staff development.
Employees are always regarded as valuable assets to any organization. Their
efficiency usually results to success of the company in one way or another. An
organizational culture is always vital if any success is to be realized in any
working environment. Employees need come through a certain routine of doing
things. This aspect helps in creating uniformity among the employees (Allen, 2012).
All employees adhering to the organizational culture tend to work in
partnership. If Toyota is able to enhance this, they will be able to bring
social responsibility aspects to the consumers. The company’s strategy of
embracing technology and being the leaders in this field will also get a boost.
Development of employees can be enhanced by adopting various strategic
management systems that include training and development systems. Efficiency
from employees will enhance sustainability for a long time.
The company also needs to invest a
lot on promotional activities. This includes advertising and other techniques
being used by the organization. The industry is very competitive hence needs
aggressiveness in creating consumer awareness. Toyota should be on the look out
of the promotional strategies being used by the competitors. It might copy from
them or come up with something better. The more people see something being
promoted, the higher their chances of being potential consumers. This would
enhance sustainability since the company will remain profitable for a long time.
Increasing Value Creation
There are many strategic approaches
that Toyota can adopt so as to increase value in its operations. Among them is
using technology that is reliable, tested and serves the processes and people
intended. At all times the technology that is adopted should be there to help
employees and not to replace them. Lying off employees usually comes as a
negative publicity to the general public. To avoid this, Toyota should be very
cautious on impacts brought by any technology that is adopted. Technology that
is difficult to standardize should also be avoided. Technology of such nature
disturbs the flow of the processes and calls in for additional supervision of
employees
(Borowski, 2010). The
organization should also take the initiative of modifying or rejecting technologies
that conflict with the company’s culture. This is because the results might be
unpredictable hence making the organization deviate from its objectives. Such
an occurrence might diminish the organization value.
Another way that Toyota can increase
its value is by getting more involved with community development. There would
entail participation in various social event and other profitable ventures to
the society. This helps build the company’s image and becomes more valuable to
the consumers’ eyes.
Conclusion
Toyota is recognized among the
leading automobile manufacturers in the world. Efficient management has been
vital in this realization. Over those years, operating in the USA market has
not been easy. However, the marketing strategies that have been adopted have
enabled the company to survive amidst the stiff competition posed by other
players in the industry. Among the
strategies adopted by the organization is setting up several branches for
distribution purposes. The company has also been able to introduce product line
pricing in its marketing mix. This has been very helpful in capturing of
substantial market share. Toyota practices some form of segmentation where it
differentiates the high and low income earners. There is usage of the Just in
Time production system for efficiency purposes. Several strategies have also
been adopted in the promotional process. They range from advertising to
personal selling. All these strategies have their own strengths and weaknesses.
The company needs to start manufacturing of limited edition brands in order to
increase its market share. Establishing a favorable organizational culture and
staff development would work to enhance sustainability. Use of appropriate
technology on the other hand, would help in value creation.
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