TERM PAPER

Of

Marketing Management

On

Marketing Plan to launch a Marketing Plan to launch a

C-Segment Car C-Segment Car

Submitted By Submitted To

Aamir Khan Mr.Krishan GopalRoll no :- RT1901A61

Regd. No :- 10907135

Class :- MBA-1st sem

Section :- T1901

Lovely Professional Lovely Professional University ‘University ‘Punjab’Punjab’

Acknowledgement

I would like to take this opportunity to express my

gratitude towards all those people who have helped me

in the successful completion of this term paper, directly

or indirectly. I would also like to express my sincere

gratitude towards Mr. Krishan Gopal (my term paper

guide) for her guidance and help which she willingly

Provided at every step of my term paper.

Aamir Khan

MBA-1st Sem.

Table of content

Introduction of TOYOTA Marketing Plan of Toyota Launch a

“PRIUS” Objectives SWOT analysis Competitor Target Market

Production System Conclusion Bibliography

Introduction of ToyotaToyota is one of the best car selling companies in the world. TMC (Toyota Motor Corporation) was established in Tokyo, Japan. The company was founded in the year 1937 by a successful businessman - Mr. Kiichiro Toyoda.

The company is a corporation in the Toyota City in Tokyo Today, there are more than 317,000 people working in this company as its dedicated employees The company did not stop creating anything and they kept on creating more and more powerful things without stopping. In the year 1936, Toyota created a history by introducing a new passenger car- Toyota AA. Toyota also has other brands which are very famous worldwide and are

known as Scion and Lexus. These cars have great deals and they have majority of their shareholdings in Daihatsu and Hino Motors.

Toyota selling over 8.8 million models in 2006¹ on all five continents. A Top 10 Fortune Global 500² enterprise, Toyota ranks among the world's leading global corporations and is proud to be the most admired automaker³, an achievement the company believes stems from its dedication to customer satisfaction.Toyota has been shaped by a set of values and principles that have their roots in the company's formative years in Japan.

Besides making cars, the company also has its wings in other sectors such as financial sector. The name of this branch is Division Toyota Financial Services. This company also plays a crucial role in financial sector and gives loans and financial assistance to the people who are in need of capital. Toyota Group is the largest group of industries in the world. Toyota motors limited has seen a huge loss of about 5 billion US dollars due to internal issues. After the financial crisis that happened due to American people, Toyota lost a lot of shares and stakes and money between the years 2007-2009. The recession that happened in the world was mainly due to Americans who did not pay their loans and taxes back to the country.

Marketing Plan of TOYOTA launch a “PRIUS” Japan’s Toyota Motor has confirmed that the Prius hybrid will bemaking its way to India, where it will be aiming to capture a nichemarket. Vice Chairman Kazvo Okamoto revealed that the modelis ready and marketing strategies are under consideration, which could include selling the car by invite.Although a timeframe for the roll-out is undecided, the Prius is likely to make its first appearance in India at the Auto Expo in January 2010. The issue facing Toyota, and one which hit Honda’s Civic hybrid, the only other model in the segment, is one of cost. Unlike other Asian markets, the Indian government has not yet granted any financial incentives for the purchase of hybrids, which means they are

subject to the regular import tariff of 110%. On top of the cost of hybrid technology, this makes the cars almost prohibitively expensive. However, with the new Bharat IV emissionstandards due to come into force in April 2010, the government may wantto reconsider this policy. Toyota claims that the Prius’ emissions are 43% lower than the level required by the incoming standards. Toyota’s local unit, Toyota Kirloskar Motors (TKM), has revealed other product plans, including a new MPV, which will be smaller than the existing Innova to avoid damaging its sales. TKM claims the new MPV could have five or six seatsand a diesel engine under 2.0-litres, compared to the eight seats andengines of around 2.0-litres and above for the Innova. BMI believesthis is a strong area for expansion for Toyota. It already dominates theIndian MPV segment with the Innova, which claimed 36% of segment sales in 2008. The company has also built on this success with the launch of a compressed natural gas (CNG) version of the Innova in early 2009. TKM has also confirmed that its small car project is on track, which should be the real growth area for the Japanese giant. The as yet unnamed model, due to be released next year, will be available with a 1.2- or 1.3-litre engine in both petrol and diesel versions. TKM has revealed that it will fall intothe B+ ‘premium compact’ segment, competing with the Maruti SuzukiSwift and Škoda Fabia. To accommodate the new models, and potentially anew brand, TKM intends to double its 82-strong dealership network over thenext two years. By entering the small car market, the carmaker will gain access to a segment which accounts for around 75% of total passenger car sales in the country. Based on BMI forecasts, small car sales should surpass 1mn units in FY10, ending March 2010.

Internal strengths:

Toyota is the world’s third largest car manufacturer. As such Toyota has production facilities in more than 25 countries and can achieve benefits from economies of scale. Toyota was one of the first manufacturers to introduce the concept of “Just in Time” production that allows to reduce operating cost and overheads and to respond to customer demand quicker.

The yearly budget for R&D is set at £1.5 billion for various research centres around the world, the highest amongst car manufacturers. This willingness to invest has brought Toyota an innovative image and created products such as the Prius, “the world’s first mass produced hybrid” (Toyota)

Products

When people think of Toyota products, they usually think of a product that

lasts forever. That is exactly what Toyota set out to do, build a quality

vehicle, and after fifty years of building cars and trucks they are number one.

For the first time in history GM is not number one, Toyota surpassed both of

the top American auto companies, Ford and GM by selling 4.7 million

automobiles in the first half of 2007. Company spokesman Paul Nolasco said,

"We simply want to be the best in quality. After that,sales will take care of

themselves." Toyota’s plans are to produce 9.4 million automobiles this

year.Toyota currently offers seven different cars, seven vans/suvs, two trucks,

and three different hybrids vehicles.  When they first started they had two

models total, the Toyopet Crown and the Land Cruiser. They have come a

long way in the last fifty years. Last year Toyota produced 358,544 of the

number one selling Camry, 4,249 of the Camry Hybrid, 100,014 of the

Avalon, and 41,078 of the Solara, all of which were made at the Georgetown,

Kentucky plant. They produced 199,534 of the Corolla’s and 170,765

Tacoma’s at the Fremont, California plant.  They produced 118,062 Tundra’s,

33,917 Sequoia’s, and 172,211 Sienna’s at the Princeton, Indiana plant.

Toyota also produces vehicles at some of their other plants located in Canada

and Mexico. Over the past three decades Toyota has been a presence in the

motor sports world by producing vehicles for all forms of competitive racing.

From Rally Cars, Formula racing, and NASCAR just to name a few. Over the

past ten years they created the TRD (Toyota Racing Development) to R&D

racing parts for both racing vehicles and standard production vehicles. The

TRD presence could be seen in vehicles such as the Celica and the Tacoma

pickup.

This is going to be a tough 2008-09 for C-segment cars, which fall in the price range of Rs 5.5 lakh to 8.5 lakh. This is a list that includes mid-size cars like the Suzuki SX4, Honda City, Ford Fiesta (and Ikon), Logan, Hyundai Accent and Verna, etc.

It was bad enough for them coping with a differential excise duty structure for two years when the finance minister decreed in 2006 that small cars be levied a lower 16 per cent. The latest Budget has only increased the gap and today large cars continue to attract 24 per cent which is twice as much as small cars whose levels are further down to 12 per cent.

More than the traditional A and B-segment offerings like the Maruti 800, Alto, Santro and Indica or the more recent Zen Estilo and i-10, it is the B-plus products (Swift, Getz and Palio) that are the real threats to the C-segment range. This is because they have emerged the best option for the Santro and Indica customer keen on graduating to the next category of products.

Objectives

Objectives are important to clarify and set an objective set of targets that ought to be achieved by theplanned actions. Objectives exist on three levels; Corporate, marketing and communication.Corporate objective can be summarized as shareholder wealth maximisation and is ultimately achieved through higher profits and increased sales.Marketing objectives are the successful introduction of a new car to the market. However, in the first place the Prius was not expected to be a profit generating commercial car. In fact in the USA the Prius is sold under its production cost. The Prius was derived from a research project and its conversion to a mass produced car might be more with the intend to improve Toyota’s image, a kind of practical socially responsibility report, showcasing Toyota’s engineering capabilities at the same time.Marketing communication activities are a vital part in achieving the above two and have to be coordinated with all other company activities (production, sales, purchasing).

Strengthening the relationship with the Toyota brand

Increase the consideration of Toyota when planning a new car purchase.

The target market should be reached as fully as possible

Customer and Consumers have to be made aware of a new product and its brand name.

Being a new product with a new technology, a prime objective is to educate consumers and explain the working of the Prius and advantages of this.

Target markets should be excited about the new Prius and spread buzz/ word of mouth.

Communications should motivate consumers to find out more about the Prius; visit the website, order brochures, visit a local dealer, order a test drive.

The Prius should be considered as a full and valid alternative to traditional cars.

Ultimately communications should lead to a purchase, a higher percentage of showroom visits should be turned into sales

Toyota: SWOT Analysis with regards to the UK marketInternal

Strengths Weaknesses

World’s third largest car manufacturer, biggest Japanese car manufacturer

Reliable and High Quality Image R&D, biggest spend amongst car

manufacturers; innovative ‘Just In Time’ Production Corolla; best selling car, 20m units

todate

Understanding of European market/ culture

Distribution network/ car dealer Prestige/ image when compared

with other European makes Market share in Europe (4%)

External

Opportunities Threats

EU market, elimination of quotas in 2000

Hybrid technology Introduction of new models Online activities, online buying

Strong competitors in every segment; Ford, GM, VW, Mercedes, BMW, Honda

Public/Alternative transportation Heavy taxation/ fuel prices increase

1st Gen Prius launches July 2000 Goals• Create a halo for Toyota brand and show Toyota’s commitment to changing the world• Generate awareness of hybrids• Obtain widespread support of dealers’ sales and service personnel• Influence regulatory requirements• Modest sales goal: 12k units per year

Toyota Marketing Mix 4 P's

PriceSince 2003, Toyota has taken over to become the world's number two

carmaker and they are not very far behind GMC, the number on US carmaker. With their consistency in innovating designs and over a billion dollars spent in advertisement a year, Toyota has become an attraction in the eyes of many auto consumers worldwide. Toyota has built its reputation not only by producing high quality vehicles at affordable prices, but the brand and marketing skills they use through tactful pricing strategies. Toyota has differentiated their prices from the traditional pricing set up of many of the other automobile makers. However, it is their effectiveness in targeting consumers' needs and wants that has pushed them to the top.

Toyota believes the role of purchasing is through long term and stable production of quality products at the lowest price in a fast and timely manner. (Toyota Co. sustainability report 2006). The main objective of administering prices within any company in the automobile industry is profitability and to consistently increase efficiency in their product line. The traditional pricing strategy is formulated into the cost + profit = selling price. When auto companies make changes and improvements , cost of production increases causing the selling prices to go higher. Companies normally do not want to

cut their targeted return and therefore the costs are passed on to the consumer to maintain their profit margin. Toyota takes on slightly different approach with a sales - oriented objective. Although the variables are the same, the formula is adjusted strategically into the selling price - cost = profit. Toyota firmly believes that its markets and consumers is what determine the selling price. Waste elimination is given top priority which reduces cost and by continuously reducing these types of costs, it will result in persevering the company's profit growth.

Competitors Honda Insight, a compact which emphasizes affordability. Honda

Insight, billed as the cheapest gas-electric hybrid on the market, ranked as the top-selling vehicle in Japan for April 2009—the first time a hybrid has clinched that spot. When the Prius launched in May 2009 it took Japan's top spot while Insight sales fell to third. Features such as

15" alloy wheels, 6-speaker audio, cruise control and electronic stability control while standard on the US-spec Prius II (MSRP $22,000) are optional on the Insight.

Honda Civic Hybrid

Prius Target Market

The Prius is a hybrid vehicle that belongs in the lower/medium passenger car segment (C). However the Prius is the “first mass produced hybrid” therefore the market for this kind of car is very new and competition very light. The Honda Insight is the only other hybrid car that is currently on the market but not offering the same convenience. The Insight is designed as a two-seat sports car. However despite being a hybrid the Prius aims to provide the comfort that any other C segment car provides and therefore any other C segment car is competing against the Prius. Especially as the buyers is like to have owned a conventional car before. The market for this car can be split into two major categories; Customers (or B2B) and consumers (or Private buyers). Customers are fleet and corporate buyers, they buy cars either for hire/rental or for company fleets. These will be few and already known to Toyota. They can be reached especially through the business press and the traditional media as well. The environmental features make the Prius particularly interesting for business buyers, because of his low operating cost. Car dealers are also customers but to a lesser extent as they are not as free in their choice as other parties. They will have to buy and sell the cars that Toyota produces. Eighty of Toyota’s 227 UK dealerships will be equipped to deal with the Prius and renamed Hybrid Technology Centres. Therefore the number of these ‘customers’ is already set.

Toyota has managed to strategically market its products to its target market better than the big three, in this case the Toyota Prius. Toyota`s hybrid market has been segmented according to the buyers behavior, in this case, buyers who are pro environmentalists. The car has been readily

accepted in consumers' minds and most consumers see the car as an environmentally friendly and efficient car. The 2010 Prius gets an estimated 50 miles per gallon .The Prius has an official capacity of 11.9 gallons, and according to the above estimate, the car has a maximum range of about 595 miles.Toyota has used the penetration pricing strategy instead of the skim pricing strategy because the demand for hybrid cars is elastic, and the quantity of cars bought will increase as prices decline plus the car itself will gain mass appeal faster . With Toyota`s strong balance sheet, Toyota is also able to compete with other car makers by offering competitive financing and lease rates throughout all its 1200 distributors in the United States alone. Currently Toyota controls about 16 % of the market share in the United States and has five major assembly plants in the United States which support its distribution(place) network. The Prius is promoted in many different ways, mainly through advertising ,sales promotions and personal selling . Of interest might be the fact that the Prius has been featured in dozens of movies and TV shows as the car driven by the main actor, such as CSI Miami, Weeds, Evan Almighty, and Superbad. To top of the list, a few notable Hollywood stars have been raving about the Prius, for example, Will Ferrell says " In terms of the product itself, Toyota has "masterfully redesigned, the Prius making it more stylish than its predecessors. They have even added optional accessories that are "revolutionary" in the auto industry such as a solar powered moon roof that can cool the car on hot days, and also added the intelligent parking assistant, similar to the one we see on Lexus commercials. Essentially the car automatically parallel parks itself. The Prius has a very competitive Price , with the base models starting at $ Lastly , it is also important to note as a marketing student how Toyota has responded to Robert Lauterbons 4 C`s of marketing. The Prius, is the customer's solution to the current spike in gas prices, and lack of alternative fuels to enhance gas mileage and reduce emissions. The Prius pricing answers the question of cost and with 1200 distributors nationwide, Toyota is conveniently located to its target market and has a well designed promotional strategy that communicates the product to its target market.

Toyota USA to Sell a Quarter-Million Hybrid Units In 2007

June 7, 2007 - Torrance CA. - Toyota Motor Sales (TMS), U.S.A., Inc., announced the one-millionth hybrid sale today by parent company, Toyota Motor Corporation. Of the one million hybrid sales worldwide, more than half have been sold in the United States -- 541,210 units from 2000 through April 2007.

"The cost benefit of hybrids is becoming more apparent with climbing gas prices," said Jim Lentz, TMS executive vice president. "We anticipate combined sales of Toyota and Lexus hybrids of a quarter million units in the U.S. during calendar year 2007."

Despite earlier concerns that decreased tax credits from the IRS would dampen hybrid demand, Toyota continues to post record hybrid sales. Calendar-year-to-date hybrid sales for TMS totaled 119,154 units, an increase of 75 percent over the same period last year.

In May, TMS posted sales of 36,101 hybrid vehicles, up 102 percent over last May. Toyota Division posted sales of 34,174 hybrids, up 121 percent over the same period last year. Lexus Division posted sales of 1,927 hybrids.

Toyota Production System

Toyota has long been recognized as an industry leader in manufacturing and production. Three stories of its origin have been found, one that they studied Piggly-Wiggly's just-in-time distribution system, one that they followed the writings of W. Edwards Deming, and one that they were given the principles from an Army training program. It is possible that all are true.

Regardless of the origin, the principles, described in Toyota's management philosophy, The Toyota Way, are as follows:

1. Base your management decisions on a long-term philosophy, even at the expense of short-term goals.

2. Create continuous process flow to bring problems to the surface.

3. Use "pull" systems to avoid overproduction.

4. Level out the workload.

5. Build a culture of stopping to fix problems, to get quality right the first time.

6. Standardized tasks are the foundation for continuous improvement and employee empowerment.

7. Use visual control so no problems are hidden.

8. Use only reliable, thoroughly tested technology that serves your people and processes.

9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.

10. Develop exceptional people and teams who follow your company’s philosophy.

11. Respect your extended network of partners and suppliers by challenging them and helping them improve.

12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu).

13. Make decisions slowly by consensus, thoroughly considering all options; implement decisions rapidly.

14. Become a learning organization through relentless reflection and continuous improvement.

BIBLIOGRAPHY

www.google.com

www.wikipedia.com

www.ask.com

Magazines ,

Book (Marketing Management)