Contemporary Issues in Toyotas Marketing - Essay Example

Contemporary Issues in Toyota’s Marketing In the 21st century, changes in marketing strategies have been accelerating inevitably, more rapidly than the marketing revolution of 1960s. Successful business strategies for today’s business situations become completely irrelevant and inapplicable in a few years. This fact necessitates the adoption of flexible business marketing strategies to cope with the rapid changes. Ideal flexible marketing strategies will consider three important factors in its design stage: the possibility of technological changes that will affect the business, global forces that affect all individuals world wide, and the continuous push towards the deregulation of the economic sector. Several global companies have been designing marketing strategies since the wake of the 21st century technological development and the financial crisis in recent times, and some of them have actually survived the hard economic times. One of the companies that have had an outstanding market strategy in the 21st century is Toyota Motor Corporation. Toyota is one of the leading automakers in the world, with a wide range of vehicle models for its customers. The company’s sale in 2002 estimates around 6.17 million units worldwide. In addition, the company has more than 11 manufacturing affiliates and subsidiaries and 12 plants, 45 manufacturing companies with locations in 27 countries all over the world. One of the major contributing factors for the company’s success is its marketing communication strategies. Marketing communication include practices like advertising, packaging, publicity, public relations, sponsorships, sales promotion among others. Marketing Communication Toyota marketing communication strategy employs both product-led information and communication plan around specific vehicle brands, as well as corporate-led communication on its objectives in the industry. This is an effective mode of marketing strategy considering that Toyota is a monolithic corporate brand. The corporate objectives are part of the Global Vision Document unveiled in 2010 as a managerial guide for the company. For instance, according to Grant 2005, Toyota ran articles in the Japan Times in 2003 educating the readers on the environmentally friendliness of its “green” cars The company is also establishing a leaf care logo to portray its efforts in reducing environmental effects of its products in the sector, its plants, and all the processes. This part of its communication strategy enhances its relations with the community that buys its products, as well as those living in its workshops’ neighborhood. Toyota has been establishing initiatives that help it communicate with the communities within its market target. Some of these initiatives include volunteer services to the surrounding community and financial assistance in form of grants. By engaging in such activities, Toyota is sending a message to the outside world of its social responsibility, a factor of consideration that influences the customers’ preference in the automobile market. These efforts highlight it as a responsible company that offers reliable products, thus capturing and maintaining a market niche for it. In addition to its environmentally conscious efforts, the company has consistently been enhancing its employees’ awareness on environmental credibility concern through bulletins within the company, environmental booklets issued to employees at the company’s sites, educative seminars, and events held on occasional basis, like the Environment month. The company also rewards employees who involve themselves with voluntary services like creating awareness of environmental responsibility through initiatives like tree-planting, cleaning riverbanks, and others. January 2002 saw the introduction of a new communication exercise that incorporates screening of movies (Like Erin Brokovich) to inform them of the benefits of the environment. To understand the Toyota marketing communication strategy, a brief look at its Toyota Prius marketing communication plan of April 2003. The communication plan highlights all the necessary data to venture into the market, with precise modes of advertisement, and the group target of the advertisement message. The company highlights marketing communication as an essential element in the achievement of shareholder wealth maximization and the successful introduction of Toyota Prius in the market (MacKinnon, 2010:272). Part of the proposed marketing communication report include strengthening the model’s relationship with the Toyota brand, ensuring that the target market has been reached adequately, ensuring that the communication on the new Prius is interesting and motivates the customers. In addition, the communication on the new vehicle model would lead to purchase, as well as turning majority of showroom visits into sales. The document proposes the AIDA chain model as a mean of communication for the new model. Today, we may attribute the success of the Toyota Prius to the marketing communication that the company used during its introduction to the market. Another important part of the company’s corporate communication was its participation in the Formula One (F1) race early 2001. The performance of the Toyota team at the British Grand Prix was fabulous, with the Toyota’s participants emerging number one and two. Despite the short stint at the F1 races, critics consider this as one of the most successful communication tool used by the company (Young & Aitken, 2007:32). The move had a great benefit to the company too: it gave Toyota an opportunity to invite stakeholders like suppliers, dealers, and sales personnel to the event to talk business as they watch the F1 races. Another marketing communication change in Toyota in 21st century was the communication structure. Newspapers, notably the Mail, on July 24, 2003, reported that the company had combined its public relation and advertising departments into one integral group. This move was to enhance their consistency in advertisements and messages sent out from the company. Another reason was to create uniqueness in communication and enhancing efficiency. As Shimp 2010 put it, it is important also to note that the decentralization of the company’s communication, that is, each subsidiary has an independent communication department with its own staffs. Segmentation In marketing, segmentation is a strategic concept of dissembling customers and identifying a base for the marketing efforts targeting a specific group. In some situations, a company may target more than one group but directs the basic goals directly on an individual with the aim of maximizing profits (Pride & Ferrell, 2009:362). Segmentation relies on extensive customer research and behavioral analysis from research data collected by a company. A prime example of excellent marketing segmentation strategy is the one in use by Toyota. The most significant business segment of Toyota is its automotive operations. Automobile operations occur as a global competition with the world automobile market. The management of the company allocates resources for the automotive operations as a single segment globally, and for the assessment of its performance. Management of the subsets of Toyota is not separate entities such as oversea or domestic operations. All the management functions align to the managers who oversee the responsibility of major operations within their segments. Toyota markets its vehicles using a carefully plan market segment that considers customer demands, thus the achievement in the automobile market. The company has more than 16 vehicle models in the market, with some competition amongst the models. The major purpose of this type of segment is to cater for all the various needs of its customers in the automobile market. Since the beginning of 21st century, the company has been introducing new vehicle models that suit the environment, an example being the Prius. Since the beginning of this century, Toyota has developed a diverse business portfolio in its existing brand as well as introduction of new brands: Lexus and Scion. After successful penetration of Toyota models into the US and other countries, the company designed a marketing strategy that would establish a new brand under a separate entity. At the time, the companies had a reputation for making fuel-efficient and fun cars. The solution was Lexus, a luxury making automobile company with separate from Toyota but one of its brands. The company was to emphasis on quality customer service but with a completely separate operation with Toyota. By the early 21st century, Lexus was among the best selling vehicles in the US. After Lexus success, Toyota began a study, Project Genesis that would give solutions on how to attract the young generation to the company’s products (Coffey, 2006:101). The result was introduction of several youthful and sportier models in 2000 to the US market: Celica, Echo, and MR2 Spyder. The project was a failure resulting to removal of Celica and MR2 Spyder in 2005 from the US market. In 2003, the company was embarking in another project that would attract the youth to the company’s products despite the failure of project Genesis. The company added another brand, Scion, into the market. The purpose of he Scion brand was to introduce radically manufactured and cheap vehicles for the youth in US in order to attract them to other Toyota products. The brand currently has three car models: xA, xB, and tC. The first two are rebadged Japanese models, while the third is a new design model based o the preference of American youths (Toyota). The new models not only target the youth but also offer non-haggling prices that simplify the company sales tactics. As a result, the company was successful in attracting new young customers in its market niche. An overview of its segment strategy follows a pyramid structure, selling many low-cost models like Camry and Corolla, and a few costly models like Tacoma pick-ups and the luxurious Lexus. Some of the most essential Toyota models include the Tundra, Lexus, and Prius. Tundra is the most recent Toyota pickup truck with an aim to penetrate the North America market (Saxena, 2009: 192). The model was dong well in the market since its introduction, but the sells are exerting pressure from the recent global financial crisis. The only plant responsible for the Tundra brand in North America is still receiving support from Toyota, with the addition of a diesel and heavy-duty variants to increase the market share. The luxurious Toyota division, Lexus, has been focusing on North America since its introduction. Currently, Toyota is expanding the brand into the Japanese market. The success of the brand is very significant to Toyota as the luxury brand gains the company more profits than the other models and brands. The Prius is the first hybrid line for the company. This has also contributed to the success of the company as it was among the first automaker to design a hybrid technology. Currently, Toyota faces stiff competition from Ford on the hybrid basis, and leases the technology to Honda. The company enjoys a 73% hybrid market in the US. Despite the speculated cease of government subsidies on hybrid models, the company can rely on the popularity of the Prius to continue sustaining its market share. Because of the segmentation, Toyota enjoys a significant market share in Japan and the US, but a relatively small presence in Europe. Models the Hilux pickup and Hiance van have a good establishment as reliable vehicles. Its association with Daihatsu has set a considerable market share in the rapid developing South East Asian countries (Hill & Jones, 2010: 150). The main success of the company lies in its wide range of vehicles, encompassing all the classes and ages of its customers. Ethics and Organizational culture Toyota defines compliance as the adherence laws, ethics, regulations, and policies while undertaking business activities. In simple form, compliance is not going contrary to the societal rules, or acting in a manner likely to attract criticism from the public (Halbert & Ingulli, 2009: 292). Toyota holds its business ethics in high regard in order to reflect a good corporate citizen to the public. Toyota Precepts are the foundation principles that guide the management of the company, and clearly indicate the managerial concept. The first clause of the precepts concerns honoring the spirit and language of every nation, and undertaking fair and open corporate activities to become a good corporate citizen. The company holds ethics in high regards and usually takes all available opportunities to inform the public on its founding managerial principles of compliance. Special events and occasions throughout the year incorporate the company’s principles, from New Year messages to education and training programs for its employees. Toyota has a well-established business culture that heeds the guiding principles of the company. There are three main characteristics of the guiding principles in Toyota. One, executive managers visit actual work sites to identify any problems from the workers or the products. Secondly, potential issues passes through the conceptual Toyota Processing System to identify the root and design remedies for the problem (Toyota). Lastly, unfavorable information is submitted to the upper management rather then concealment of the same. In its effort to maintain the culture, the company engages its employees in educational programs and on-job training workshops to strengthen and raise their awareness and responsibility of being Toyota’s employees. Further to this, the company has designed concepts that provide a guideline to the ode of conduct of all employees under the company’s payroll, as well as holding meetings of Corporate Ethics Committee on a regular basis. The code of conduct for Toyota’s employees is not the traditional “do” and “don’t” similar in many companies. Rather, the code of conduct incorporates positive explanation of the guiding principles. The conduct also highlights the departments that an employee may contact in case of difficulty in making decisions, as well as confirming appropriateness of their conduct. In addition to these measures, there has been establishment of several compliances regarding the ethical operation of the company. In 2003, the company established the compliance hotline that enables the employees to consult with one another on issues concerning ethics. There has also been a revision of the charter concerning good corporate behavior, in 2002. The Corporate Ethics Committee includes all the executive management from the vice presidents to corporate auditors. The committee’s work is to prevent the company from risks of ethical and legal violation, while ensuring that all operations comply with the ethical regulation (Toyota). Their executives and directors disseminate the proceedings of the committee’s meetings to the employees they oversee. The company has also shown its ethical compliance effort through the establishment of consolidation between several divisions within the company. The different divisions (accounting, legal, human resource, global human resource, and corporate planning) work in collaboration to enhance awareness of ethical implications of the company, and promote support to its employees. Despite its effort to maintain an ethical business culture, Toyota has come under fire regarding a recent problem with its vehicle products early 2010. A portion of the vehicles assembled in late 2009 were said to have acceleration problems. Nevertheless, this was a test of how ethical the company did its operations. The company halted more than eight of its best-selling models in the US and recalled close to nine million cars worldwide (Johnstone, 2010: 122). Some critics exaggerated the issue discussing the problem as an ethical issue. Regarding the issue, the company’s acceleration problem was not an ethical issue, but rather that of failure in crisis management. The company was quick in gathering the facts surrounding the problem and using the facts to implement remedies for the problem (typically through their Toyota Processing System). In conclusion, Toyota has a good marketing strategy that involves marketing communication, segmentation, and ethical principles that guides its operations. The success attached to the company can be attributed to these marketing strategies. Their Toyota Processing System is an icing on the cake. The company’s change in its management strategy has helped the company acquire and maintain a market share in the automobile industry, as well as bravely face crisis. For the many years it has extended services to clients, Toyota has achieved amicably. However, the fact that they are operating in a competitive market, with other emerging companies, more still need to be done. As at now, the company has won the largest market share, but maintaining this confidence to its clients is the assignment for the management. What the company’s management should understand is that in the competition of big box retailers; it is hard for two different firms to achieve the same kind of success in their operation. Therefore, to remain in the forefront, it is paramount to note that customer satisfaction comes before realizing set goals and objectives. Bibliography Coffey, D., 2006. The Myth of Japanese Efficiency: The World Car Industry in a Globalization Age. Cheltenham, UK: Edward Elgar Publishing Limited. Grant, R. M., 2005. Contemporary Strategy Analysis. Malden, MA: Blackwell Publishing. Hill, C. & Jones, G., 2010. Strategic Management Theory: An Integrated Approach. Mason, OH: South-Western Cengage Learning. Halbert, T. & Ingulli, E., 2009. Law and Ethics in the Business Environment. Mason, OH: South-Western Cengage Learning. Johnstone, R. G., 2010. 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