Seventy four years since its founding, Toyota Motor is almost at the pinnacle of the global auto industry, having overtaken Ford Motor and General Motors in vehicle sales. Toyota was established in 1937 in Japan. Toyota has grown from being a small Japanese carmaker in the 1960s to the biggest carmaker in 2007, outranking General Motors. The founding principles for this success were embodies by the “Toyota Way” – a respect for learning, truth, trust, team-work, challenge and continuous improvement. First time it introduced its product Corona in the US in 1965. By the 70’s, Toyota was the best-selling import brand in the US.
During the 80’s, it started manufacturing vehicles in the US. In 2006, it had globally become the second largest car seller and third largest car sellers in the US having more than fifteen percent market share. It is estimated that by 2008 it is going to be the number one car producer and seller both in the US and across the world. This profound success of Toyota is associated with its most proficient market strategy. The case of Toyota notably proves that how important is market strategy in the life of a company to be a market leader.
Toyota Company has so many successes in its production history. Toyota even in Japan and in worldwide is one of most important and successful multinational companies. One of the most important reasons for success of a company is its marketing strategy. In continue I will try to peruse Toyota's success reasons and good planning for achievement in international market around the world. The reasons for achievement of a company in international markets is belong to variety elements such as good production and assembly system, good strategy both in local and international markets, good planning and managing and so on. In continue extend each subject.
Toyota Production System (TPS)
The history of just-in-time and other Japanese manufacturing innovations can be traced to the Toyota Production System developed by Taiichi Ohno. "The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota that comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers."1 "The Toyota Production System (TPS) was established based on two concepts:
The first is called "jidoka" (which can be loosely translated as "automation with a human touch") which means that when a problem occurs, the equipment stops immediately, preventing defective products from being produced; The second is the concept of "Just-in-Time," in which each process produces only what is needed by the next process in a continuous flow."2 Jidoka (Auto-Activation)
The aim of this system is to delegate responsibility to the workers for the quality of products from the elementary production tasks themselves. In practice this innovation means that line workers not only have the right, but are obliged to take the time which is necessary in order to carry out the tasks necessary to ensure the maintenance of the highest quality standards at each stage of production, even while production is taking place. Just-In-Time
This system is a method of production programming involves a series of innovation in the production and the preparation of the work more generally in the logistics of production and in the management of the flows and stocks of intermediate and semi-finished goods. These innovations take together constitute a system of production with much reduced stocks, made possible a system of information processing unique and unprecedented in the history of work organization.
Supply Chain Management Supply chain or value chain management is composed of the operational or tactical activities and can be defined as ‘managing the entire chain of raw material supply, manufacture, assembly and distribution to the end consumer (Jones 1989 cited in Lowson 2002).
Christopher (1998) defines supply chain management as the management of upstream and downstream relationships with the suppliers and customers to deliver superior consumers value at less cost to the supply chain as a whole. Toyota has a great supply chain management. This system helps Toyota to deliver its needed parts to all around the world without any problem in least time, so we can say that this system has great role in success of Toyota corporation.
Lean Manufacturing The goal of lean manufacturing is to create a manufacturing environment that is driven by demand and that holds only a small amount of inventory and product at any given time (Bacheldor 2004 cited in Ndahi 2006). Lean Manufacturing is a unified, comprehensive set of philosophies, rules, guidelines, tools, and techniques for improving and optimizing discrete processes. “Toyota Motor Corporation's vehicle production system is a way of "making things" that is sometimes referred to as a "lean manufacturing system" or a "Just-in-Time (JIT) system," and has come to be well known and studied worldwide.”3
The above reasons are just a summary of simple rules that helps Toyota to build its brand and market share in the world. But the most important reason that Toyota uses it for building its brand as a international brand is marketing strategy. Toyota as a Japanese company could operate good strategy for acting around the world. In continue I will try to write about Toyota’s international marketing strategy that helps Toyota to become today’s Toyota.
Toyota International Marketing Strategies As it has from its humble beginnings in 1937, Toyota continues to win success by blending smart business with social, cultural and environmental awareness. Toyota’s marketing material and news releases consistently stress social awareness and responsibility as strongly as profitability to measure corporation’s success. For example, Toyota’s mission statement calls for “stable long-term growth, while striving for harmony with people, society and the environment,” while their website repeatedly describe their social contributions and efforts to be a “good corporate citizen” (Toyota website, 2005).
This approach is key to Toyota’s global success from a marketing standpoint. Toyota has a special way for promoting its products. In fact Toyota with using its smart business tried to build its brand in so many countries. "Unlike many other auto manufacturers, Toyota has gone beyond promoting the product itself in the creation of their brand. By extending manufacturing operations into their target markets, Toyota makes their brand socially and politically more acceptable. Americans can buy Toyotas and still “buy American.”
Europeans can spend their Euros at home. "4 In fact Toyota makes its brand as a local brand in every country and by this work Toyota can find loyal customers. Toyota use one of principles of international marketing to build its brand and increase its market share. This strategy helps Toyota to have a good growth strategy in U.S. and Europe market. But beyond this strategy Toyota uses so many other factors to have successful international markets. Among others, three distinctive competencies of Toyota are remarkable. These distinctive competencies appeal the consumers, build trust with them, and make them satisfied. These competencies are as follows:
Popular Economy Car
Toyota is best known for ‘popular economy car’. It has successfully branded the concept of ‘popular economy car’, by producing cars matching to the concept. It has garnered its success by selling the concept to the consumer. It has also become profoundly successful in segmenting, targeting, and positioning. As a result, based on the pricing reports generated by over ten million visitors, out of top ten cars, three are Toyotas – Toyota Camry (No. 2), Toyota Corolla (No. 4), and Toyota Avalon (No. 8). (Kelly Blue Book, 2007) It produces eight varieties of cars. Among them, the prices for the four varieties cars range 10,000.00 US $, three varieties range 15,000.00 US $, and one variety ranges slightly over 20,000.00 US $.
Toyota simply did not stop to the concept of ‘popular economy car’. This concept could have easily turned into product maturity and decline. But Toyota continuously engaged in improving technology – design, looks, comfort, fuel efficiency, environmental friendliness, and other technical improvements. For example, Toyota Corolla was first introduced in Japan in 1966 and in the US in 1968 as a first generation Toyota Corolla. Since then roughly in every three years it is being developed and marketed in a new model.
By 2006, tenth generation of Toyota Corolla was already launched with significant technological improvements. Toyota’s hybrid cars can be taken as another example. It started producing hybrid cars in 1995 however till 1999 Japan was 2 the only market for its hybrid cars. Coming to 2005, it became successful to capture a large chunk of US market. Today, it is selling almost seventy five percent of its hybrid cars alone in the US market.
Low Operating Cost Why consumers purchase Toyota? The simple answer is that Toyota’s cars are distinctive with the properties of low operating cost. For example, a survey carried out by Toplin Strategy Group in 2007 has revealed that 73% of Prius owners had bought Toyota Prius because of financial incentive to purchase the vehicle such as lower sticker price or lower operating cost than other choices. (Marketing Green, 2007) Similarly, based on 45% highway driving and 55% city driving with annual 15,000 miles Toyota Prius has been proved to be the most fuel efficient car than any of its competitors such as Honda Civic Hybrid, Ford Escape Hybrid, and Lexus GS 450.
(Fuel Economy, 2008). Toyota enjoys much lower labor costs in the United States and benefits from an undervalued yen for cars made in Japan. In the United States, this comes to about $2500 per vehicle. The entry level and middle level market segments are very sensitive to price and vehicle durability. Toyota has been able to translate its cost advantage into vehicles with higher, more attractive content and longer life than General Motors.
Toyota is constantly looking for ways to lower costs and improve products. It translates most of the additional profits it earns, over GM, into better product design and additional capacity. At GM, the Executives vote themselves bonuses and the union demands more benefits and featherbedding at the first sign of profits.
From the perspective of marketing strategy, Toyota can be taken as a company that has successfully achieved its mission statement, successfully branded its distinctive competencies, and profoundly achieved its organizational objectives. This success is based on its successful market strategy.
This is corroborated by the fact that all of its products studied in this paper (Toyota Corolla, Camry, and Prius) do fall into Star quadruple under the Boston Matrix. In quintessence, it can be said that Toyota is an outstanding case for learning how to build and implement market strategy, get penetration in the market, manage product life cycle, uphold market positioning, best use of integrated market communication (IMC), and branding its product in the mindset of the customer. In short, Toyota is a notable example that proves how important is marketing strategy in the life of a company and managers.
Sources 1. http://en.wikipedia.org/wiki/Toyota_Production_System 2.http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/
3.http://www.toyota-global.com/company/vision_philosophy/toyota_production_system/ 4.http://www.associatedcontent.com/article/35412/toyota_as_a_global_corporate_citizen_pg2.html?cat=27 5.