Principles and Management of Marketing: Toyota Motor Corporation case - Essay Example

?Principles and Management of Marketing Table of Contents Table of Contents 2 Industry Overview 3 Company Overview 4 PESTEL Analysis of the Automobile Industry in the UK 7 Political Factors 7 Economic Factors 8 Social Factors 8 Technological Factor 9 Environmental Factor 9 Legal Factor 10 SWOT Analysis of Toyota 10 Strengths 10 Weaknesses 11 Opportunities 12 Threats 12 Strategies Adopted for Toyota Prius 13 Conclusion & Recommendations 16 References 17 Bibliography 19 Industry Overview The period of 1890 witnessed the beginning of the car industry or rather the ‘automobile industry’. This particular industry of automobiles turned out to be increasingly successful in comparison to the ‘manufacturing industry’ in UK since the past 20 years. The ‘automobile industry’ is presently considered to be one of the most significant industries across the globe. The Automobile Revolution was stated to have surfaced in the year 1982. It was in this year that the technology related to the manufacturing and operation of cars was acquired by the North Americans as well as the Europeans. It needs to be mentioned in this context that in the early period of the 18th century, numerous series of attempts were found to be made in few parts of Italy, Britain, US and France to merge the steam engines with the road carriages. However, it is believed that in year 1890, the method of bringing together the manufacturing competence, the technology and the prospective market was undertaken so as to initiate the selling of motorcars surfaced in Germany and France. This is how the automobile industry surfaced and gained pace (Holweg & et. al., 2009). The automobile industry of the UK was observed to have altered itself during the past decade from a segment that suffered from the problem of unstable labour relations along with a bad repute with regard to quality as well as productivity in a segment that is referred to as fiercely competitive. After Germany, UK has been stated to be the country that has the biggest automobile industry worldwide. The automobile industry of UK has been found to have an overall workforce of 570,000 people in around 70,000 different businesses reporting an annual turnover of ?14 billion. The automobile industry of UK reaps benefits owing to the existence of numerous international organisations and the presence of their chief assembly plants in the country (United Kingdom Parliament, 2009). Company Overview Toyota was stated to be established in the year 1919 in Japan and has been stated to deal in the production of advanced looms and weaving. The company then planned to start its operations in the automotive segment and raised its primary capital for this purpose by way of selling the exclusive rights to a British textile group known as the Platt Brothers for a particular machine. The company manufactured its very first car in the year 1936 and the next year followed the official formation of the company Toyota Motor Corporation (TMC) (Toyota Motor Manufacturing (UK) Ltd., 2012). Toyota or the Toyota Motor Corporation (TMC) is a multinational company and is considered to be the biggest producer of automobiles across the globe. Presently, the company operates as a leading international business engaged with manufacturing vehicles in its plants that are situated across the globe in six continents. The company has been learnt to directly engage an overall workforce of above 250,000 employees. The company caters to around 160 global markets with its products. The Toyota Production System, which was the company’s ground-breaking and revolutionary approach towards competent techniques related to manufacturing, was found to offer an innovative production pattern to the industry. This approach was later taken on in various shapes by numerous other businesses which in turn depict the leadership of the organisation in the global context (Toyota Motor Manufacturing (UK) Ltd., 2012). In this regard, it was observed that Toyota initially was known to be a national company catering to the Japanese market only. However, in the period of 1980 and 1990, Toyota planned to invade the car market of North America. It was successful in capturing the North American market along with entering the Western European market as well steadily developing its pathway to be a global leader. Soon Toyota was witnessed to capture the US market in-spite of the presence of strong players like General Motors (GM) and Ford (Liker, 2004). Toyota is stated to be one of the leading car manufacturers with a present global market share of around 11% and with total annual production of around 85,57,351 units along with total annual sales of around 84,18,000 units (Toyota, 2010). The net income of the company in 2011 was recorded to be 408,183 million Yen which was a significant increase by 94.9% from the last year, i.e. 2010. The sales of the company in different regions are as follows. Source: (Toyota, 2011) The market of UK has been stated to be considered as the chief market for the company on the basis of sales as well as manufacturing (Toyota Motor Manufacturing (UK) Ltd., 2012). The company has been observed to operate two production centres in the country. One is mentioned to be a vehicle manufacturing centre situated in Burnaston at Derby and the other one is an engine manufacturing plant situated in Deeside at North Wales. These manufacturing plants are believed to contribute majorly towards the company’s production capacity, especially in Europe (Toyota Motor Manufacturing (UK) Ltd., 2012). PESTEL Analysis of the Automobile Industry in the UK Political Factors The governmental regulations are observed to have created an influence on this particular industry from the period of 1960. The regulations have been observed to emerge owing to the rising concerns of the consumers for safer vehicles and for the environment as well. The industry has been stated to be quite closely associated with the government policies. In addition, the surcharges as well as the taxation rates are comparatively high in the UK which can adversely affecting the industry (Holweg & et. al., 2009; Bosner & et al., 2006; Barker, 2002). Economic Factors The automobile industry of the UK can be observed to have been adversely affected by the present crisis. The requirement or rather the demand for cars and other vehicles witnessed a significant fall in the country. Requirement for emergency credits along with government rescues were witnessed in various regions in relation to the car suppliers as well the manufacturers for the reason of continuing their business. The current crisis has also been observed to pose a negative impact on the vehicle suppliers, manufacturers and even on the service providers. However, the international requirement with regard to personal transportation is observed to grow which can be regarded as a positive aspect for the vehicle manufacturers and the suppliers in the global context (Holweg & et. al., 2009; Bosner & et al., 2006; Barker, 2002). Social Factors A rising reliance on cars by almost every social group across the entire geographical region in UK can be observed in the current situation. The demand for cars is found to rest in the city areas and other suburban places where there are enhanced transport systems. The concentration with regard to car ownership is currently on rise in the UK as the market trend was observed to reflect a tendency among individuals with the desire to purchase cars since their early days. Furthermore, increased success with regard to the working populace and decreasing car prices can be observed a crucial factor that is in turn amplifying the demand for cars in the UK market (Holweg & et. al., 2009; Bosner & et al., 2006; Barker, 2002). Technological Factor The rising demand for cars in the UK as well as in the global market has triggered an intense competition among the car manufacturers. Thus, constant technical enhancements are being witnessed in the automobile industries worldwide. The manufacturers can be witnessed to consistently invent new designs and incorporate their vehicles with the most advanced technologies so as to stay ahead in the competition. Electronic controls, electronic systems as well as fresh materials along with an array of accessories have been as the major technical enhancement areas in the industry. Advanced technology is also being used for the reason of enhancing the performance of the cars and for bringing down the level of emissions owing to the growing environmental awareness and the freshly formed regulations in this regard (Holweg & et. al., 2009; Bosner & et al., 2006; Barker, 2002). Environmental Factor The issue of global warming can be witnessed as an emerging international reason of social apprehension which is also being taken into account by the UK automobile industry. Therefore, the manufacturers are observed to concentrate on manufacturing cars that are supposed to be environmental friendly to a large extent (Holweg & et. al., 2009). Legal Factor It has been observed in UK that for the reason of developing a well-structured market economy and to support the rise and recovery of the automobile industry, the government needs to structure specified laws as well as look into some of the issues that have been stated to act as hindrances within the automobile industry structure. The government needs to take into concern the variations in the currency and also in the exchange rates which have been adversely affecting the particular industry as well (Holweg & et. al., 2009; Bosner & et al., 2006; Barker, 2002). SWOT Analysis of Toyota Strengths Toyota is considered to be quite strong in its strategic aspects which make it stand apart from the other existing manufacturers in the industry. Its strategic advantage is believed to be the processes related to the production titled as the kaizen and the kanban system. This system of production is examined to be quite efficient facilitating production in mass. The company also introduced innovative operations in its system of producing trucks and other heavy vehicles. The fresh innovations were made with the purpose of attaining the goals set by the company related to production cost and quality of products as well as to manage the process of manufacturing more firmly which would in turn assist Toyota to bring down the amount of resources required. It would also enable the company to be more receptive towards the requirements of the market (Takoev, 2006). The company also shared and maintained a close association with few of its suppliers who were quite well reputed in the industry. This close association facilitated the company to jointly work with the suppliers for the reason of bringing down the expenses and enhancing the quality of the constituents purchased from them. The company adopted the Just-In-Time service system which helped the company to restore their stocks without much wastage of time. All these mentioned factors and steps undertaken by the company proved to be quite helpful as it facilitated the overall enhancement of the efficiency in its production process. Furthermore, carrying out its manufacturing process at comparatively low costs allowed the company to invest funds in their research and development which ensured constant innovation in its products. The company also identified the need to develop and manufacture cars according to the requirement of the various markets where it had its presence. This made the company quite popular in the different markets. Its low cost of production further helped the company to offer its products at comparatively low prices from its rivals which also contributed to the organisational strength (Takoev, 2006). Weaknesses The problems in the value chain would create hindrances in the process of production and manufacturing which has already been encountered by the company. The demand for the products of the company is also witnessed to get affected by these problems in the value chain which has already resulted in decreasing demands in Japan. The company is also witnessed to have somewhat meagre competencies which need to be managed efficiently so as to attain competitive advantages and thus control its growth rate in the global as well as UK market. The company also witnesses certain lacuna in terms of its value chain management that makes it immensely important for the company to improve its activities in the value chain so as to boost its business as it would provide a competitive edge to the company and enhance its operations in the value chain. Another major weakness of the company has been identified as it’s over dependency on the suppliers which could hamper the overall process of production in case of a minor fault made by the suppliers (Toyota, 2010). Opportunities The company has been observed to invest heavily in its research as well as development activities. Owing to this strong research, especially in the area of hybrid vehicles, the company has successfully been able to trigger the demand for its products. The constant research enables the company to introduce advanced technologies along with making innovations which also helps the company to hold on and give rise to interests among the customers for the products. The company has also been exploiting the prospective opportunities by targeting on the urban youth market (Toyota, 2010). Threats Toyota, in the year of 2005 had to take away quite a number of its vehicles owing to defects in the suspension systems. This created a negative image for the brand which influenced the organisational performance as well as the corporate image of Toyota to a certain extent which reflects that the company has to face a few social threats in relation to its innovative practices. In addition, the immense competition in the global automobile industry also raises competitive threats for the company. The company has also been observed as open to the fluctuations in the rates related to the raw materials like fuel and steel which could have an impact on the overall manufacturing process concerning the low cost production system. These aspects can be considered as a major threat for the company (Toyota, 2010). Strategies Adopted for Toyota Prius The Prius is described as a vehicle falling in the category of hybrid ones and fits in the segment of lower to medium car. The Prius is stated to be the ‘first mass produced hybrid’ vehicle and thus is quite a fresh introduction in the market facing very low competition. This particular hybrid model aims at offering high comfort to its passengers. The market with regard to this car has been segmented in two different groups, i.e. the customers and the consumers. The customers have been referred to the corporate as well as the fleet purchasers who are observed to indulge in purchases for rental purposes or for the need of the company. These customers could be targeted especially with the help of the traditional media as well as business press services. The environmental characteristics are also stated to be an interesting aspect which would help to lure the business purchasers owing to its decreased operating expenses (Andidas, 2003; Fournier, 1998). In the similar context, the consumers have been referred to as the private purchasers. The market of private purchasers is considered as the significant one amid the two segmented markets. The target for this particular segment is particularly focused on the middle age group. This segment is believed to include the wealthy and the well-educated individuals of the UK market. This implies that they would be mostly in managerial or professional jobs with more disposable income which would enable them to purchase the product. The product is stated to include features that are environment friendly and thus would attract the majority of people in south UK as market trend in that region is observed to possess a tendency to indulge in purchases of such cars. The product comes with certain characteristics that are considered to be unique and not present in any other hybrid models currently served in the market. Therefore, these aspects need to be highlighted during the time of promotions along with special references to its success in Japan. Promotion would be carried out extensively in the dealers as well as the retail outlets along with other important and popular locations. The main form of promotion would be through the various forms of media along with sending direct mails to the already existing customers of the company. Advertising accompanied with personal selling is given increased preference by the company for the product (Andidas, 2003; Ewen, 2001). Conclusion & Recommendations The demand and requirement for automotive products that are fuel efficient and serves with lower level of emissions by the consumers have given rise to the development of hybrid vehicles. Toyota Prius offers certain features that are quite unique and different in comparison to the other hybrid cars. Owing to its efficiency and features the car has been already successful in dominating the Japanese, the US and the UK market. Therefore, it can be assumed that the purchasers are quite satisfied with the performance of the car and would thus stick to the car in the coming years. However, the company needs to launch fresh models with certain innovations and added features so as to hold on to the growing interests of the customers in this product segment. Therefore, it can be stated taking into concern that the efficient performance of the product and the rising demand for hybrid vehicles, Prius is expected to sustain its position in the market in the coming years (Rodriguez & Page, 2004). References Andidas, 2003. Toyota Prius; Marketing Communications Plan. Toyota Prius, pp. 1-20. Barker, L., 2002. The Motor Industry: 2002 Market Review. The Motor Industry, pp. 1-131. Bosner, G. & et. al., 2006. Multi Sector Skills Study: Automotive Retail Industry. Department of Trade and Industry, pp. 1-116. Ewen, S., 2001. Captains of Consciousness: Advertising and the Social Roots of the Consumer Culture. Basic Books. Holweg, M. & et. al., 2009. The Competitive Status of the UK Automotive Industry. University of Cambridge, pp. 1-127. Liker, J. K., 2004. The Toyota Way: 14 Management Principles From The World’s Greatest Manufacturer. McGraw-Hill Professional. Rodriguez, A. & Page, C., 2004. A Comparison of Toyota and Honda Hybrid Vehicle Marketing Strategies. Rocky Mountain Institute, pp. 1-5. Fournier, S., 1998. Consumers and Their Brands: Developing Relationship Theory in Consumer Research. Journal of Consumer Research, pp.343-373. Takoev, O., 2006. The Expansion of Toyota Motor Company in the Russian Car Market. The Aarhus School of Business, pp. 1-151. Toyota, 2010. Annual Report 2010 Purpose, Perspective and Passion. Toyota Motor Corporation. Toyota, 2011. Financial Summary. Toyota Motor Corporation, pp. 1-23. Toyota Motor Manufacturing (UK) Ltd., 2012. Toyota in the UK. Toyota, pp. 1-19. United Kingdom Parliament, 2009. The Automotive Industry in the UK. Business and Enterprise Committee, pp. 1-105. Bibliography Arnould, E. J. & Wallendorf, M., 1994. Market-Oriented Ethnography: Interpretation Building and Marketing. Journal of Marketing Research, pp. 484-504. Read More