The Toyota Motor Company continues to strive to be the global market leader in the automobile manufacturing industry. Over the years, Toyota has managed to remain the leader of this industry through its management structure, fuel efficient vehicle design and competitive pricing based on global market knowledge.
Toyota has realized that environmentally conscious products were needed to ensure continued company (and sales) growth in the future. Toyota has been actively reducing its carbon footprint since 1998. Annually, Toyota has been publishing its Environmental and Social Sustainability report in order to enhance disclosure of information regarding environmental actions carried out in conjunction with its corporate activities.
Through more efficient and “cleaner” production lines it has reduced its environmental impact. Toyota also seeks to be the market leader for so called “clean (or green) vehicles” such as Electric Vehicles, Hybrid Vehicles and Plug-In Hybrid Vehicles. This marketing plan will discuss Toyota’s strategy with regards to green vehicles, with particular reference to one geographical location, Europe. This Marketing plan will have a closer look at how the European Branch operates within Toyota’s global structure and how it reflects Toyota’s overall vision of a cleaner, more sustainable future.
1.1 VisionToyota realizes that its future lies in the production of environmentally conscious cars. Toyota’s vision of a cleaner future revolves around two main points. Firstly, the production of vehicles that have a smaller impact on the environment. Along with “cleaner” versions of its gasoline powered cars, Toyota believes that the company’s success in the present and future lies in its line of Electric, Hybrid and Plug-In Hybrid Vehicles. Through this line of vehicles Toyota will be actively reducing environmental impact by producing cleaner cars for consumers to use. Secondly, Toyota believes that to achieve its goals towards a cleaner future, it must continuously strive to make its production lines even cleaner.
In fact, since 2002 Toyota has managed to reduce the energy used for the production of vehicles by 40%, waste products by 50% and water consumption by 70% (Toyota Motors Europe: Sustainability Report 2011).
Both of the above points fall under a global philosophy called “The Toyota Way”. As analysed by Liker (Liker J., 2004) this holistic philosophy maintains fourteen key principles which Toyota has adopted to give its customers what they want, when they want it, in the most efficient way possible whilst leaving the smallest possible carbon footprint. Toyota also believes that continual growth can be achieved by exceeding its customers’ expectations. In fact the Toyota Global website(2012) states “our attitude is to anticipate and deliver to the needs of those we serve”
1.2 ObjectivesToyota’s main objectives are stated clearly in its Sustainability Report (2011). The said report outlines a global vision, to be attained by the year 2020. Toyota’s new Global Vision 2020 comprises of three main pillars: * Lead the way to the future of mobility, which is our core business. * Commit to quality, innovation, environmental protection and by doing so, make cars that people love. * Engage our people’s energy and passion to “Always Find a Better Way” (Toyota Motors Europe: Sustainability Report 2011)
2.0 Current Market SummaryTraditionally, Toyota’s primarily focused on the US and Japanese markets. The European market is a fairly new addition to Toyota’s Sales portfolio. Although the European market for cars has seen a steady decline in recent years, Toyota currently holds a 4.2% share of the total car market. In 2011 total sales in Europe amounted to 822,386, 10% of which were Hybrid vehicles.
2.1 Market NeedsThrough Customer Relationship Management and market research, Toyota has established a new set of characteristics it’s vehicles need to satisfy in order to reach the Global Vision 2020. Toyota has determined it’s cars need to be: * Of high quality and reliability thus requiring infrequent maintenance. * Widely affordable, including increased affordability of Hybrid and Plug-in Hybrid vehicles.
* Silent in a world which is increasingly aware of noise pollution. * Easy to use, with particular reference to simplified user interfacing on new Hybrid and Plug-in Hybrid vehicles * Clean. Even if in a traditional gasoline engine model emissions need to be kept to an absolute minimum. Whilst identifying the need for “cleaner” cars, Toyota has also launched the Plug-in Hybrid Electric Vehicle (PHEV) demo project in 18 European countries.
This project involves a limited production line of 200 PHEV vehicles which are being road tested by customers in 18 European countries till 2013. So far the project has already increased awareness of PHEV cars and provided crucial data with regards to technical performance and customer satisfaction. This data will be used in the near future to launch a large scale PHEV production line. Toyota realises the importance of its customers time. The increasing use of the internet, especially in the early stages of a purchase, has made the company’s website an important asset. Therefore an updated website will all models, colours, specifications and options is of vital importance.
2.2 Market GrowthDespite the afore mentioned drop in car sales in Europe, Toyota has managed to sustain a positive growth within this market. Toyota aims to increase its European market share from 4.2% to 4.5% ( 835,000 vehicles sold) in 2012. In 2011 its Hybrid sales amounted to 10% of the total sales figure.
Toyota seeks to increase this to 14% in 2012 and up to as much as 20% in 2013/14 (Reuters: 5th March 2012). To do so, Toyota has re-designed some of its more popular models (Yaris and Auris) and has offered them in both traditional gasoline engines and Hybrid configuration. To further maximise growth in the Hybrid and Plug-In sector, many of Toyota’s European distributors have started offering very advantageous finance schemes on these models. This means that a customer no longer needs to go through the bank to purchase a new car.
2.3 Market SegmentationsToyota’s European Market is vastly diverse and requires heavy segmentation. Each market segment requires separate market research, a separate marketing strategy and a separate product offering all together. When segmenting theEuropean market one has to take the following considerations: * Age of the target consumer
* Social Standing* Occupation and thus purchasing power* Educational background* Other cultural and socio-economic factorsFor the purposes of this plan we shall conduct a socio-demographic segmentation. Market segments may include :* Young ,trendy people who opt for small, inexpensive, cheap to run vehicles. this segment is also very environmentally conscious.
* Young adults with higher spending power who opt for small saloon, small SUV’s/mini-vans and 4×4 vehicles. This segment is also very environmentally conscious but less so than the young trendy people * Middle aged adults who are better off and can afford higher end vehicles such as large saloons and high end 4×4 vehicles. This segment is less environmentally conscious and therefore less likely to invest in a Hybrid or PHEW vehicle unless these become trendy to own.
* Mature adults who are about to retire or have retired from work. This segment looking for comfort and practicality while still maintaining style. Depending on their occupation and ability to save(throughout their career), their spending power will vary. This segment is the least environmentally conscious. Other market segments include small, medium and large business organisations for which Toyota has developed a range of trucks and vans of various sizes and payload capacity. 2.4 SWOT Analysis
Strengths* Toyota has firmly placed itself as one of the leading car manufacturers in the world and is also steadily gaining ground in Europe. Toyota’s reputation for quality and reliability has help to breach and gain a foothold in the European automobile market. * Toyota is on the forefront of cutting edge technology and is the leading manufacturer for Hybrid vehicles in Europe and aims to further increase sales of Hybrids and PHEV in the next 2 years.
* The Toyota Way of management continues to advocate efficiency in the production, distribution and sales of Toyota vehicles. Toyota’s continues drive towards efficiency has led to a reduction in cost of production/distribution/sales * Toyota’s Sustainability Report informs partners, distributors, employees and customers of the company’s commitment to a cleaner future. This further reinforces Toyota’s Corporate Social Responsibility in the minds of all third parties. * The company has a highly skilled workforce
* Wide distribution network through clearly marked Toyota stores and other authorised distributors allowing potential customers easy access to the company’s vehicles Weaknesses
* Toyota’s size as an organisation is in itself a weakness. The scale of the company presents different sets of challenges. The decision making process may be slower than in other organisations due to the sheer size of the management structure. * A wide distribution network requires a large workforce dedicated to logistics and distribution which can be quite expensive.
* A weakness can also be identified in the supply chain for hybrid vehicles in Europe. Even though hybrid Yaris and Auris models are produced in Britain (and as of April 2012, also in France) almost all of the parts used to make these vehicles have to be imported. This will increase the overall cost per unit, therefore reducing competitiveness. (Reuters 5th March 2012) * Toyota owns and runs 8 manufacturing plants, 14 parts centres and 9 vehicle logistic centres in Europe. These plants and centres have high fixed costs. With an expected 5% decrease in the demand for cars in Europe, these plants’ fixed costs may become a long term burden on Toyota Europe and may decrease profitability. Opportunities
* Being on the forefront of hybrid and PHEV technology, Toyota is an ideal position to strengthen its hold on this market segment and increase overall sales in Europe. In fact sales targets for 2013/14 for hybrid vehicles are initially set at 14% and 20% at a later stage. Various governments are imposing lower licensing fees on hybrid vehicles thus providing the perfect incentive for consumers to opt for a Toyota hybrid model * Soaring fuel prices are driving consumers to look for alternative modes of transport. Toyota’s hybrid and PHEV vehicles are very fuel efficient thus providing Toyota with the perfect opportunity to increase its market share.
* Toyota plans to start manufacturing parts for hybrid and PHEV in Europe once sales reach 150,000 hybrid vehicles per year. At present, these parts are imported from Asia and the US. The production of parts in Europe would bring significant savings in transport and logistical costs which would bring a lower cost per unit and in term allow Toyota to be even more competitive with its prices. This would also put Toyota in a position to offer maintenance services to its customers at a lower price.
Threats* In recent years Toyota has had to recall millions of vehicles due to defective brakes, suspensions and accelerator units. Recalls have cost Toyota millions of dollars in the past and they continue to be a costly problem in the present and foreseeable future. Recalls can also have a negative effect on brand equity and effect sales growth in the long term. * New brands could increase competition and erode Toyota’s sales. New entrants from Korea, China and India are providing various market offerings, at different levels of quality and at increasingly competitive prices.
* Soaring fuel prices and raw material prices could have a negative impact on costs of production and distribution therefore further reducing profitability. * Economic factors such as the global recession in the last 3/4 years and the lack of consumer confidence in banking institutions will have a negative effect on sales. In recent years, unemployment rates have risen in Europe making selling expensive commodities, such as cars, even harder.
2.5 CompetitionThe Automobile industry is in itself a fiercely competitive industry. Even more so in the European market place due to the numerous European car manufacturers. Toyota faces stiff competition from most European car makers as they market and sell the bulk of their products in Europe. Therefore when it comes to purchasing a car, the European consumer has many more product offerings to chose from. Most of the European car makers have developed entire fleets of cars to suite different budgets, demographics and tastes. In Europe, specifications such as miles per gallon, design features and retail price, have become battle grounds for car manufacturers.
Toyota also faces a socio-cultural challenge: European car manufacturers take pride in the fact that their cars are designed and built in Europe for Europeans. This, in a way, can prove to be an advantage for brands such as BMW, Mercedes-Benz and Volkswagen. These brands can give the perception of being able to understand the European consumer’s needs better than their Asian and American counterparts. Toyota also faces stiff competition from other Asian manufacturers such as Kia, Hyundai and Honda. These manufacturers have also realised the importance of maximising fuel efficiency (with particular emphasis to small urban/city cars).
Asia manufacturers have also been able to compete when it comes to retail price. Labour is relatively cheap in certain parts of Asia, thus allowing Asian manufacturers to keep costs of production low and passing on the savings to its customers. Competition has also risen due to new entrants into the European market. American giant General Motors launched Chevrolet Europe in 2005. Chevrolet have redesigned product offerings and created new product offerings to suit the European market.