Toyota

Executive Summary

Toyota is one of the leading car manufacturers in the world. The company has been expanding its markets over the last few decades. To ensure that it successfully enters into new markets, Toyota Motor Company has come up with a number of strategies. Improved marketing communication is one of the main strategies that the company has come up with to reach its target audience.

In this study, it was found out that over 90% of the people who knew the brand saw it in one of the various forms of advertising strategies that the company has. With this technique, the company was therefore successful in capturing its esteemed target audience.

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Introduction

Toyota Motor Corporation is the one of the leading automobile manufacturers in the world. The company is the third leading manufacturer of vehicles in the globe. It sells vehicles to over 160 countries in the world (Andidas, 2003). Toyota Motor Company is leading car manufacturer in Japan.

In North America, it has a market share of approximately 10% in the motor vehicle industry (Andidas, 2003). However, the company is not doing that good in Europe. This is due to the different taste and preferences of the European target market. The people of Europe desire cars that are luxurious and have elegance, something that they cannot find in the cars that are manufactured by Toyota.

Due to this fact, they prefer other European cars such as Volvo, BMW, Mercedes and Ford. Despite this fact, Toyota still controls over 4% of the market share in the region (Andidas, 2003). It is believed that the market share of Toyota will increase due to the lifting of quota by the European Union in the year 2000 that restricted the imports or exports between Europe and Japan. With the quota lifted, individuals can easily import vehicles from Japan and Toyota is one of the brands that is expected to gain from the lift.

Toyota offers a full range of models from cars to trucks. It also has a variety of brands that are sold all over the world. Corolla, Fielder, Lexus, Daihatsu, Celica, Sprinter, Premio and Camry are some of the brands that the company manufactures. In the year 2002, the global sale of all the brands combines totalled to 6.17 million units (Andidas, 2003).

In Japan, Toyota Motor Company has 12 manufacturing plants and 11 subsidiary plants. On a global scale, it has 45 manufacturing companies in 26 countries. This ensures that the company is able to meet the global demand of its products.

Over the years, the company has come up with a number of strategies that have ensured that it remains to be successful. Having a strong internal system, a friendly human resource team, good relations with its clients and a desirable public image are some of the factors that have ensured that the company is as successful as it is.

However, the motor vehicle industry is facing a lot of challenges. There is the issue of rising fuel prices. This has made owning a vehicle to be an expensive venture. In addition, there is the environmental concern that motor vehicles are produces a lot of noxious fumes that pollute that atmosphere. They therefore play a critical role in environmental degradation. As a result, many governments have imposed heavy taxes that have considerably increased the price of vehicles.

To respond to this issues, Toyota has come up with a new brand; Toyota Prius. This new brand is a hybrid car. This means that the vehicle is environmental friendly since it uses alternative sources of fuel. In addition, it is more efficient and has been build to comfort and class.

It is also the first hybrid car under mass production (Andidas, 2003). Toyota has come up with several strategies to ensure that their vehicles successfully enter into the European and American Market. Improving their communication chains was one of the strategies that the company came up with.

Background

For the last several years, the world has been experiencing a lot of changes in the climate. There have been massive droughts and floods. The average temperature of almost every part of the world has increased. Almost every condition in the world is in transition. With the current trends, people fear that earth may not be fit for human habitation. This will be due to the adverse condition that may be present. Man will not have enough time to adapt to the changes.

As a result, our entire species may be wiped out. The main challenge that we are facing now is the problem of global warming. This phenomenon is believed to have been caused by the emission of green house gasses into the atmosphere. These gases tend to increase the absorption rate of heat by the atmosphere. As a result, the partial temperature of the world have increases. Gas emission from the exhaust pipes of motor vehicles have been a major source of these green house gasses (Biddle et al., 2003).

The world is also facing a major problem with its natural resources. Most of the natural resources that are found in the world cannot be renewed. They can therefore be exhausted if they are not used in a sustainable manner. Oil is one of the resources that may be exhausted in the near future (Biddle et al., 2003).

At the present moment, many oil wells are running dry. This has brought about a global crisis as a result of the increases demand of the product. Almost every sector of the economy is dependent on the product. Due to this fact, the price of the commodity has risen incredibly within the last several years. Gasoline is one of the products whose price has increased as a result of the increasing oil prices. The world is currently facing the highest prices of gasoline in its history (Andidas, 2003).

The motor vehicle industry is now facing a lot of crisis as a result of the rising prices of gasoline and the great concern on the stability of the environment. Many governments in the world have formulated policies that aim at reducing the congestion of motor vehicles. High taxes are being levied on motor vehicles and its associated products. This in turn makes purchasing and maintaining a motor vehicle to be an expensive venture.

Through its research and design team, Toyota has come up with an answer to the crisis that the motor vehicle industry has been facing for many years. In the year 1997, the company released a new brand into the market (Lindsay, 1997). This brand was known as Toyota Prius. This was the first hybrid car to be introduced in the world. The car can be powered independently by either electricity or gasoline.

The Prius was the first hybrid vehicle to be put on mass production. This aimed at meeting the global demand for the vehicle. According to the manufacturers, Toyota Prius emits one tonnes less of carbon dioxide as compared to other vehicles. This includes diesel powered family cars. The brand was successful in terms of sales. By the year 2010, over 2 million units of the vehicle had been sold. This was mainly in USA and Japan.

Perhaps the success of the brand laid on the communication marketing strategy that Toyota had for the brand. To reach its target market effectively, the company had to understand their demography and physiography. This gave them information as to who they were, what their taste and preferences were and the best means through which the company can use to reach them.

Toyota Motor Company used the media as their main communication strategy. This was in the print, visual and audio avenues. It also used direct mail method to send memos to its clients. The company also advertised the car during business conferences. To determine whether the communication channels were effective in reaching the target audience, it was necessary to conduct a research on the effectiveness and efficiency of the marketing communication channels of the company.

Objectives

To determine the most effective advertising channel for Toyota Prius.
To determine the effects of the communication methods used by Toyota on consumer behaviour.

Research Questions

Which is the most effective communication channel for the advertisement of Toyota Prius?
Does the communication strategy used to advertise Toyota Prius have any impact on consumer behaviour?

Literature Review

Building of consumer loyalty and promotion of consumer behavior are key factors that have to be considered especially when putting out a new product in the market.

Many factors have to be considered to ensure that the consumers can recognize the new product and differentiate it from the ones that have been in the market. Proper advertisement is one of the main methods that can be used to achieve this objective. If it is conducted in an effective manner, it will be able to attract new customers and retain the old ones (Biddle et al., 2003).

This is because advertising is an essential element in the determination of consumer behavior (Kauppien, 2004). Many firms in the world spend a lot of money conducting research to determine the most efficient communication method that they can use to advertise their products in so that they may have an impact on consumer behaviour (Jugger, 1999).

Product marketing is mainly dependant on the culture of the target market and environmental effects of the product. As it is, firms spend a lot of money on advertising their products in a way that aims at winning the eye of the consumer. To achieve this, a product must have a positive impact on the consumer.

It has always been the role of car dealers to advertise the cars and products that they have on their shops. This strategy was only successful for vehicle brands that fit that had long been established in the target market. In UK for example, this strategy had been successful for brands like BMW, Land Rover, Ford and Mercedes. In USA, this strategy had been successful on the sale of brands like Chevrolet, Ford and GM.

For the last several decades, car manufacturers have been expanding their markets. They all have a dream of having a global market for the brands of vehicles that they manufacture. This has seen the expansion of companies like BWW, Toyota, Ford and Mitsubishi. The same ideology has led to a lot of mergers and acquisitions that have been experienced in the motor vehicle industry (Kauppien, 2004).

It is always difficult for a product to enter into a new market. When Toyota ventured into the UK and US markets, it faced a lot of stiff competition from the brands that had already established themselves in these markets. The sales of the company were not good.

This is due to the fact that it was mainly relying on local dealers to advertise their brands, a strategy that had been the tradition of the company and many other motor vehicle companies in the market. With time, the management realised that the strategy was not successful, especially in the UK market (Lindsay, 1997).

To ensure that the sales of the company increased, Toyota formulated a number of new strategies. These strategies aimed at improving the internal organization of the company and the external relations that it (Jugger, 1999). Marketing communication was one of the changes that the company had instituted for, especially due to the fact that they had just released a new brand into the market; Toyota Prius. To market this product, the company came up with several strategies.

For the company to be successful in this new markets (US and UK), it had to come up with an advertising strategy that would capture the different taste and culture of this target group. To ensure that the needs of the company and the needs of the target market were in line with one another, Toyota Motor Company came up with a corporate strategy, a marketing strategy and a communication strategy (Jugger, 1999).

The corporate strategy aimed at strengthening the value and trust of the shareholders of the company. To achieve this, the company formulated a strategy that will ensure in earns maximum returns from its expansion into the new market.

To achieve this, the company aimed at reducing its overhead costs and increasing the number of units sold. As a result, the company increased the number of assembly plants in USA and UK and commenced the mass production of the Prius. In addition, it enhanced the features of the car so that it can meet the American and European standards (Kauppien, 2004). This saw the debut of the second and third generations of the model.

The marketing strategy aimed at increasing the rate at which the new brand would be launched successfully in the market (Jugger, 1999). Toyota Pruis was launched as a research project of a hybrid car. With its launch, Toyota wanted to pass the message that the brand is sensitive to the current environmental issues that the world is facing and it also has in mind the expenditure of its customers.

With this brand, Toyota wanted to create a warm relationship with its clients so that they can be loyal to the brand and when they thought of buying a new car, Toyota will be their first option. The project therefore did not have a profit motive. As a matter of fact, the selling price of the car is below its production cost (Jugger, 1999).

The communication strategy was perhaps the main strategy that the launch of the Prius depended on. This was the strategy that the other strategies (corporate and marketing) relied on. The Prius was a new car in the market. Due to this fact, the company did not have any trends or facts to rely on.

The success of the brand relied only on proper marketing and advertisement. To ensure that this is achieved, the company first identified its target market in UK and USA. It realised that the individuals who were likely to purchase the car were people who were between the ages of 30 to 50 years. These were male and female individuals who were either single or married, had an empty nest or had children.

With regards to this target market, the members had three possible characteristics that would be essential in the communication of the information of the new brand. These individuals would be either early adopters, environmental friendly or value conscious. The early adopters are those people who always want to be with the latest version of a product that is in the market.

They have the love and desire to be the first to own a technology and embrace it (Lindsay, 1997). Environmental friendly individuals are those people who recognise the impact of motoring on the environment. They prefer to own smart cars that do not have a negative impact to the environment. Finally, value conscious individuals are those people who would want to own a vehicle that is efficient in terms of fuel consumption and cheap to maintain.

To reach these groups, the best communication strategy that the Toyota group came up with was the media. This included print media (journals, dailies and car magazines), television (motor shows such as Top Gear and well scheduled commercials) and other sensitive modes of communication such as the internet (Kauppien, 2004).

Methods

Literature Review

Literature review was a source of secondary information for the exercise. This data was obtained from books, magazines, peer reviewed journals, online articles and other relevant sources. Through literature review, some of the methods that had been used in the previous studies were borrowed and applied to the current study. Also, the recommendations of the previous studies were considered in the current work. Information from literature review was therefore used as a guiding tool in conducting this study.

Administering of Questionnaires

To gain quantitative data, questionnaires were administered to the target groups using the following procedure:

There was a total of four sessions to conduct interviews each day.
The interviews were conducted in the morning, midday, evening and at night.
Interviews were mainly conducted in malls and body shops that mainly had sold and repaired Toyota cars.
The number of participants in each session ranged between 8 and 10 individuals.
Members of different age groups were interviewed to ensure that the attitudes of members of all age groups are tested.
Each session lasted for around 60-90 minutes.

Interviews were conducted with the help of a moderator. This ensured that all requirements of the study have been precisely covered. To ensure this, a pre-determined agenda was used.

Analysis of qualitative data and questionnaire designing

To construct a questionnaire that was precise and straight to the point, analysis and interpretation of qualitative data was necessary. This information was essential in the process of designing the questionnaire and ensuring that it became a powerful tool for the collection of quantitative data. The resulting questionnaire therefore was precise, flexible and be able to collect only the relevant data that was needed for the research study.

Method: Qualitative data coding and survey conducting preparation

The data that was obtained from interviews was coded statistically to reveal the trends and sequences. This was essential to ensure that the information contained in the final report was precise and free from error. The inferences that were arrived at from the analysis of qualitative data together with the information from literature review were used to structure the questionnaire to reflect only the relevant information for the study.

Primary Research (quantitative)

Primary data is used to refer to data that has been collected directly from the area of study (Lindsay, 1997). For this study, questionnaires were used to collect this vital information. This was a critical procedure to obtain first hand information that helped to explore the research objectives and gain statistical data that is necessary for data analysis.

The questionnaires were structured in such a way to minimize the occurrence of errors and which may make the data collected from the field to become unreliable. Careful measures were taken to avoid this. Prior to the conduction of the interviews, the validity of the questionnaires was tested and approved for use.

Method: Survey

Structured questionnaires were used to collect data from the target group. These questionnaires consisted of an average of 10 questions that were structured in such a way that one question led to the other. Sixty individuals were interviewed face to face for five straight days excluding weekends. The interviews were conducted on two different locations; a local mall and a body shop that sold and repaired Toyota cars.

Individuals who visited the shop were interviewed. The interview did not only target the people who owned Toyota Prius but also other people who owned other brands (either Toyota or Non-Toyota). People who visited the mall and these body shops were the target group.

The target group was composed of individuals aged between 30-50 years. This assisted in determining the attitudes of consumers of all age groups both the young and the old. Random sampling technique was used to get the individuals to be interviewed in the study to avoid biasness.

Data Analysis

Raw data from the field is of no use since it does not make sense. It is mainly composed of numbers and codes that need to be analyzed to make sense. Analysis of data involves three major steps:

Data preparation that involves the organization of the data that has been collected for easy analysis.
Descriptive statistics that entails the description and interpretation of the data that has been collected. This can be done using charts and bar graphs to explain the trends that have been observed.
Inferential statistics that is done to test whether the data that has been collected is consistent with the hypothesis of the study. This is where either the null hypothesis or alternative hypothesis is proved to be true.

Method: SPSS 16.0

For accurate analysis of the statistical data, a computer programme called SPSS 16.0 was used for descriptive data analysis. The data was explored using descriptive statistics and histogram plots to determine the shape of the distribution for each sample variable. The name given to each variable for the data analysis was given in a table.

Data analysis was carried out using parametric tests where the data followed a normal distribution and where the sample number was equal to or greater statistical power. Where the data did not follow a normal distribution or where the data was split into groups of less than the sample size (n), non-parametric test was used. For example, a Pearson correlation test was carried out on the data to explore any linear relationships between the variables.

Results

The results that were found from the study were very interesting. The data that was acquired from the questionnaires were interpreted using the Likert scale. These results clearly showed the attitudes and perceptions of the people who were interviewed during the study. Each question in the questionnaire was used to measure a unique variable that was being tested in the study.

72% of the people who were interviewed stated that they first heard about the Prius through commercials that were aired on TV, radio and print media. 9% of the individuals who were interviewed had never had about the brand before. 16% of them stated that they knew about the car via internet advertisements.

The rest did not remember where or when they heard about the brand. Most of the respondents were aware of the features that the car had (54% of the respondents). The respondents were also aware of the fact that the car was one of the most environmental friendly vehicle in production since 58% of had done a further research on the car. 24% of the respondents were satisfied with its efficiency and reduced carbon emission.

There was however a small proportion of the individuals who were interviewed that did not like the performance of the vehicle. When asked to comment about the car, one respondent stated that from the pictures that he had seen, the car was too small to accommodate an average family and carry their luggage at the same time.

As stated earlier, most people stated that they first heard about the Prius through commercials on television, radio and print media (72%). Of this 72%, 44% of the respondents stated that they saw the commercial on CNN, BBC and VOA, local radio stations, newspapers and magazines.

They stated that they saw or heard the commercial during breakfast, over lunch hour or in the evening. 15% of the respondents stated that they heard about the car on documentaries and motor shows that were being aired in local TV stations and radio shows. A small percentage of the respondents (3%) said that they saw the cars in movies and TV programmes.

16% of the respondents stated that they heard about the Prius on advertisements on the internet. They saw the advertisement on famous websites and search engines such as Google, Amazon, Toyota, and the websites of other corporate firms and car dealers.

The word of mouth was the least method that was used to advertise the car since less than 1% of the respondents knew about the car via this method. Only 6% of the individuals who were interviewed owned the car. However, 11% stated that they may buy the car and 34% thought that it was a nice car.

Discussion

From the results, it is evident that Toyota has an effective marketing communication strategy. This can be supported by the various advertising mechanism that the company has. From the results, we can also conclude that these communication-marketing strategies were effective in reaching the target audience.

This is because more that 90% of the individuals who were interviewed in the course of the study were familiar with the Toyota brand that was being investigated. This was Toyota Prius. Of all these individuals 6% of them were owners of the brand. This therefore suggests that through its advertisement strategy, Toyota Motor Company was able to enter into a new market and influence the consumer behaviour by convincing them to buy their product (Jugger, 1999).

From the data that was collected, the media was the most preferred way to pass information to the target market. This is because 72% of the respondents stated that they heard about the Prius through the media. This was either through the television, the radio or print media. Other forms of advertisement that had considerable impact on the target audience were advertisements that were posted on the internet and communication through the word of mouth.

All these methods were effective in reaching the target audience. Most of the respondents were knew the brand and the features that it had. This was stunning especially for the respondents who did not own the vehicle. We can therefore conclude that Toyota had successfully entered into the US and UK market and captured the attention of its target market through its brilliant marketing communication strategy.

Conclusion and Recommendations

The success of any company mainly depends on the effectiveness of its marketing communication strategy. Toyota is one of the companies that has a sound marketing communication strategy in the world. To overcome the difficulties of entering into the US and UK markets, Toyota launched a new brand, Toyota Prius and used a new marketing strategy to increase its sale. This strategy was successful and the Prius is now the leading hybrid brand in terms of sales. Toyota`s main marketing strategy was through the use of the media.

I would however recommend that the company should put a lot of emphasis on advertising their products via the internet. The world is advancing in terms of communication technology. Many people now spend a considerable time of their life surfing through the internet. Therefore, it the company increases its intensity of advertisement, especially through the social networks that are available, it may be able to capture a larger target audience.

References

Andidas, K. (2003). Toyota Prius: Marketing Communications Plan. Journal Of Technology, 4 (12), 31-55.

Biddle, J.E., Davis, J.B., Samuels, W.J. (2003). Contributions of Medieval Muslim Scholars to the History of Economics and their Impact: A Refutation of the Schumpeterian Great Gap. A Companion to the History of Economic Thought. Malden: Bradshaw.

Jugger, S. (1999). The Power of Advertising. Admap Magazine, 14 (2), 51-55.

Kauppien, H. (2004). Communication Strategies and Market Entry. Helsinki: Swedish School of Economics and Business Administration.

Lindsay, J. (1997). Techniques in human geography. Oxon: Routledge.

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