Marketing Audit for Toyota Brand

Marketing Audit for Toyota Brand 1 MARKETING AUDIT FOR TOYOTA BRAND Executive Summary Incorporated in Japan in 1937, Toyota Motor Corporation is the leading automotive manufacturers in the world. The firm’s success can be attributed to its well-designed market structure and effective marketing strategy. The following marketing plan provides a detailed marketing audit for the Toyota brand, analyzing the aspects of its marketing strategy that have been most effective as well as the improvements it can make to retain its market share.

1.0: Introduction Toyota Motor Corporation is a world-renowned automobile manufacturer. In 2012, it was the first automaker to produce 10 million vehicles and was thus declared the leading global automaker (Toyota Corporation, 2020). From 2014 to date, it has had the highest market capitalization among all the listed companies in Japan. Toyota produces vehicles under other brand names; these are Daihatsu, Hino, Lexus and Ranz. Additionally, it owns a stake in other vehicle manufacturing companies such as Subaru. Isuzu, Mazda, Suzuki, and Yamaha among others.

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Marketing Audit for Toyota Brand 2 Toyota’s growth and market leadership over the years is a result of efficient management.

The company ensures that it innovates rapidly enough in order to stay ahead of its competition (Kotler and Keller, 2016).

2.0: Situation Analysis Toyota Motor Corporation is arguably the largest automobile manufacturer in the world because of its unique ability to produce vehicles for a wide variety of market segments. It sells the largest percentage of its vehicles to Asia, Europe, and North America. Emerging markets are also a lucrative market for the company since they are expected to continue expanding. Its main competitors are automobile manufacturers such as Nissan, General Motors, Volkswagen and Honda. Its revenues for 2019 were USD $272 billion and it had 378,000 employees (Toyota Corporation, 2020).

Over the years, Toyota has worked tirelessly to become a brand that is associated with innovation, quality and value. Its core competence is its ability to manufacture good-quality card at some of the most competitive rates in the market. The vehicle manufacturing industry is growing at an unprecedentedly high rate, and with it, there has been a high rate of transformation and innovation due to the push for environmentally friendly cars. Its vision, mission and goals have been impactful on its ability to retain market leadership over the years. The mission statement is to design and manufacture cars that facilitate society’s prosperity. To this end, Toyota makes cars with its customers’ various needs in mind. Its goal is to create a cleaner and safer environment by increasing its production of hybrid fuel-efficient vehicles.

Toyota’s core competency is its unmatchable expertise in the manufacture of goodquality affordable vehicles. It invests heavily in research and development to design cars that suit

Marketing Audit for Toyota Brand 3 the needs of its different markets and customers globally. It also has a well-developed distribution network across the world which allows it to penetrate the market.

2.1: Customer Analysis Toyota has grown rapidly internationally, thus also increasing the diversity of its customer base (Kotler and Keller, 2015). It produces cars that cater to customers whose needs are different ranging from individuals to families, city driving and off-road driving. The brand targets people of the middle-class and high income market segments. Toyota customers are also individuals and families that are conscious about reducing their carbon footprint and reducing their fuel consumption.

2.2: SWOT Analysis In developing a marketing plan, it is important to determine the strengths, weaknesses, opportunities and threats that the company faces. The strengths and weaknesses are referred to as internal factors, while opportunities and threats are referred to as external factors.

2.2.1: Strengths Strong brand recognition and image: Toyota is arguably the most well-known and easily recognizable automobile brand in the world. Its possession of a significant market share in most markets, and its continuous innovation gives it global market dominance (Rugraff, and Hansen, 2011). It is thus easier for Toyota to market its products since it is already well-known. Additionally, the automobile manufacturer has a wide selection of vehicles, making it able to cater to the diverse market segments.

Expertise in Research and Development: For several decades, Toyota has invested heavily in research and development, giving it the ability to improve the functionality of its products and innovate faster than its competitors. It

Marketing Audit for Toyota Brand 4 studies its customers’ behavior to develop products that are relevant to their needs. This focus on research and development also facilitates its ability to implement the latest technologies in automobile production. For instance, Toyota is a leader in the production of green cars as the world becomes more conscious about the impact that vehicles have on the environment. This strength makes Toyota well-trusted for its competence thus leading to higher sales.

Strong and Efficient Distribution Network: Toyota ensures that its products are well-placed for its customers’ ease of purchase.

Across the world, there are approximately 50 Toyota production plants and thousands of Toyota dealerships where customers can view and buy cars, or service the automobiles they had already purchased (Toyota-club.net, 2021). The company has also been strategic in positioning its car brands. Its luxury cars such as the Lexus are distributed in areas where the target market is likely to access. Toyota, therefore, derives its success from using its distribution network as a marketing strategy.

Management: Toyota has many decades of experience in the automobile industry and during this period, it has also developed its competence in the running of the automobile business. It makes sure that it recruits the most competent employees in the market who can continue its culture of responsiveness and innovation.

2.2.2: Weaknesses Massive Product Recalls: Thousands of units have been recalled due to production faults such as oil leakage, faulty airbags or noisiness. This has the potential of affecting the company’s image as a brand that produces good-quality and well-tested products. The product recalls not only affect its image but

Marketing Audit for Toyota Brand 5 also affect its margins since it incurs heavy penalties whenever faulty vehicles are recalled, and high legal costs when accidents occur due to production issues.

Rapid Expansion: Toyota has been forced to expand too quickly due to its increased popularity across the world. The rapid growth may have come at a cost since it now faces challenges in hiring competent and well-experienced staff. This may be one of the key reasons that there has been a higher number of product recalls in the recent past.

Resources are Not Well Allocated: Compared to a significant proportion of its competitors, Toyota has not been able to allocate its resources in a manner that maximizes its returns. Despite being the best-selling automobile brand in the world, it has a lower Return on Equity (ROE) and Return on Assets (ROA) compared to other companies in the same industry. This affects its shareholders’ wealth, and has the potential to affect their confidence in the company thus further affecting its revenues in the long run.

Low Focus on Emerging Markets: For several decades, Toyota has concentrated its efforts on its growth in its main markets; that is Japan, Europe and the US. This has come at the expense of growing its presence in emerging markets such as India, South America and Africa, where the middle-class is rising steadily. If Toyota fails to work on intensifying its presence in the emerging markets, this has the potential to give its competitors the opportunity to gain a larger market share in these regions.

2.2.3: Opportunities The Global Expansion of the Automobile Industry:

Marketing Audit for Toyota Brand 6 The automobile industry is poised to continue experiencing rapid expansion as economies around the world grow. For instance, the middle class in emerging economies has higher purchasing power due to the expansion of the global economy, which gives Toyota the opportunity to sell more cars.

Expansion through Acquisition: As the largest automobile manufacturer in the world, Toyota is a lucrative multinational corporation. This gives it the ability to form partnerships with and also acquire other vehicle manufacturers. This will facilitate its growth, and consequently, increasing its market share and revenues.

Global Safety Regulations: In recent years, there has been a global push to enhance road safety through increasing the safety standards for motor vehicles. This acts a barrier to market entry and penetration for many automobile manufacturers that are unable to meet these standards. As a result, Toyota has been able to expand globally with less competition.

Technological Advancements: Years of consistent research and development (R&D) have enhanced Toyota’s competence, and it is now able to innovate new products faster and more easily than it’s a majority of its competitors. For instance, it is now well-known for producing hybrid and ecofriendly automobiles in alignment with the need for environmental conservation.

Competitiveness: Toyota produces a wide variety of automobiles whose prices vary to suit different market segments. This distinguishes it from its peers who focus on a particular market segment, thus giving a competitive advantage (West, Ford, and Ibrahim, 2015).

Marketing Audit for Toyota Brand 7 Economic Growth: Despite the disturbances to the global economy, there has been a growth in the average income across the world. This has made it possible for more people to purchase a vehicle, and also gives Toyota the opportunity to penetrate deeper into both new and existing markets.

2.2.4: Threats Increased competition: The automobile market has grown tremendously and is projected to continue due to an accelerated rate of globalization as well as the formation of more partnerships in the industry.

The increased competition may reduce Toyota’s market share and affect its ability to sell enough units to achieve its financial targets.

Currency Fluctuation: The Japanese Yen is sensitive to the frequent fluctuations of major currencies such as the US dollar and the Euro. When the Yen is too strong, it makes the automobile’s products in the export markets; conversely, when the Yen weakens against major currencies, it reduces the company’s revenues.

Vulnerability to Natural Disasters: Toyota is based in Japan, where the frequency of strong earthquakes is relatively high. As a result, occasionally experiences disruptions in its operations from natural calamities such as earthquakes and floods. For instance, in 2011, the production of its automobiles in Japan had to be halted temporarily due to a major earthquake.

Economic Growth:

Marketing Audit for Toyota Brand 8 The growth of the economy acts as an opportunity and also a threat. It is a threat when people have enough disposable income to opt for different automobile brands than the more ‘common’ Toyota (Kotler et al., 2016).

Revised Emission Standards: The rate of environmental degradation has accelerated in recent yearsm and in a bid to prevent further harm to the environment; countries have enforced higher standards and regulations that automobile manufacturers have to adhere to. This increases the production costs, which as a result, makes the vehicles more expensive. This could make the vehicles less affordable for certain segments of the market, thus, reducing the company’s revenues.

2.3: Competition Toyota has proven itself to be a competent brand in the global automotive industry.

However, it operates in an oligopolistic market where other automobile brands continually seek to develop better cars. As such, there are other international automobile manufacturers that threaten its market share. These include Ford, Fiat Chrysler Automobiles (FCA), Tesla, Renault, Nissan, Volkswagen, General Motors, BMW, Mercedes, and Honda. The demand for these different vehicle brands is tied to their prices, perceived value, innovation and the markets’ disposable income.

The increase in competition forces Toyota to spend more on innovating new products, improving its current products, as well as sales and marketing. To address the increasingly intensifying competition, Toyota should increase its efforts in meeting the needs of the market from cost to energy-efficiency. It must continue to develop differentiated products in order to widen its market share and earn maximum revenues from the different market segments.

2.4: Product Offerings

Marketing Audit for Toyota Brand 9 Toyota ensures that at all its vehicles are expertly designed and manufactured. It offers a guarantee that the following standard features are met for all its products: -

Eco-friendly features such as a fuel-efficient engine

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Advanced safety features

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High product quality

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Value for money 2.5: Distribution One of Toyota’s competitive advantages is its intensive distribution network. The company markets its products in approximately 190 countries worldwide. Additionally, it has manufacturing plants in more than 50 plants, and ensures that its vehicles reach every market through various channels such as Toyota dealerships, e-commerce websites, direct selling agents, service centers, showrooms. Toyota owns a small percentage of these outlets while most of them are independently-owned. A well-developed distribution network enhances its global competitiveness.

3.0: Marketing Strategy 3.1: Objectives The objective of the marketing plan is to increase Toyota’s penetration in both developed and emerging markets. In developed countries, the population has a higher disposable income and is able to choose from a wider variety of automobile manufacturers (Kerin and Hartley, 2017). Toyota, therefore, needs to position itself as a premium brand among its competitors.

Conversely, countries such as India, Malaysia, Indonesia and several African countries have a rapidly growing middle-class and upwardly mobile urban youth who will require cars. Toyota

Marketing Audit for Toyota Brand 10 should focus its efforts on ensuring that customers have easy access to information on the vehicles that are most suited to their needs and budgets.

3.2: Target Markets Over the decades, Toyota has capitalized on developing products for the various market segments. There are vehicles for the low, middle and high income consumer segments. Through its extensive R&D, Toyota takes into consideration its customers lifestyles, gender, income, age, and personalities. Toyota should focus on increasing its revenues by developing products whose features meet the needs of a wide range of consumers. For instance, a vehicle that can be used by someone who occasionally drives off-road but also needs a town car, or a car that has attractive features that are neither too feminine or masculine, thus can be used by either gender. An effective marketing technique would also bebe to partner with banks and other financial institutions to increase people’s access to financial instruments that would enhance their ability to purchase vehicles.

3.3: Positioning Toyota has positioned itself as a brand that produces high-quality vehicles that are easier to maintain that are more reasonably priced than most of its competitors. It is renowned as a brand that consistently offers good value for money. One of the strategies that Toyota should consider it developing more products that are versatile enough to cater to the needs of individuals or families who needs various features from a car.

Additionally, having earned a negative reputation for large-scale product recalls in previous years, Toyota should also focus on positioning itself as a manufacturer of cars that are technologically advanced and have high-quality safety features. Additionally, it can get the markets’ attention by designing promotional strategies and advertisements that appeal to the

Marketing Audit for Toyota Brand 11 customers’ emotions (Shockley-Zalabak, 2014). Therefore, for instance, when the customer thinks of a safe car, the Toyota comes to mind.

3.4: Strategies Product: Each Toyota car, regardless of the market segment for which it is designed, will have standard features that set it apart from competitors. These may include, an ergonomicallydesigned car seat, high-quality security features, technologically advanced systems, an attractive design and eco-friendliness. There should be free after-sales service and repairs for at least three months after the sale of a car.

Pricing: Toyota produces cars for individuals of different income levels. As such, it should ensure that it prices its products optimally in each of the segments. For instance, if the target market for a high-end car can pay $30,000 for it, pricing it at around $20,000 would make the company lose the maximum revenue that it could have earned. Additionally, pricing a car for the lowerincome segments of the market affordably will encourage more of these segment to purchase a car, hence, driving up the revenues.

Distribution: It is crucial to ensure that potential and existing customers can conveniently access Toyota products. This can be achieved by ensuring that its e-platforms are fully functional at all times, and also making sure that its sales agents are well-trained to effectively handle customer queries (Scott, 2015).

Marketing Communication:

Marketing Audit for Toyota Brand 12 The marketing communication should be clear and consistent in order to derive the best results. Given that Toyota targets different market segments, it should develop a message that speaks directly to the customers in each segment clearly. The communication channel should also be suited to the target customers and the message. Additionally, it is essential to develop a concise communications system that can be followed by the team (Ots and Nyilasy, 2017).

Toyota should particularly work on developing its digital communications strategy by engaging its existing and potential customers more on social media. An effective marketing plan should ensure that the brand selects communication channels where the customers are already active. For instance, if most of its customers are active on Facebook, it would be a waste of resources to place its marketing communication on Instagram.

3.5 Marketing Mix Toyota should study its customers keenly and develop a marketing mix that is most suited to their behavior and buying process. The buying process is divided into five distinct stages.

These are; identifying the problem, looking for information on the product that would fulfill the need, evaluating alternatives, making the purchase decision and executing it, and thereafter, evaluating the product one has purchased. At each of these stages, Toyota should develop a marketing strategy that shows its customers that it is the best option among the many available alternatives, while doing so, it should also consider the needs and behaviors of each market segment. For instance, at the information searching phase, Toyota should ensure that its advertisements address the relevant details about the product.

At the second stage, Toyota should provide platforms where the customers can engage and find answers to their questions (Héraud, Kerr, and Burger-Helmchen, 2019). At the third stage, Toyota should provide a list of all the options available at each price range, and their

Marketing Audit for Toyota Brand 13 features. At the fourth stage, the customers should be provided an effective payment method. At the last stage, the brand should offer after-sales service, and provide a method of receiving clients’ feedback.

Conclusion Toyota’s success in the automotive industry is a result of sound management, developing good products and implementing an effective marketing plan. The company goes beyond producing cars; it studies its customers and identifies their needs, creates the products that they need and use an effective marketing strategy to ensure that they get the market’s attention with the product. Its ability to create products that feel like they are designed for the consumer creates a good product-consumer relationship, thus leading to brand loyalty. Instead of having a very wide product line, the company should focus on designing products that meet several consumer needs at once. It should therefore intensify its efforts in research and development.

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Kerin, R.A. and Hartley, S.W., 2017. Marketing (13th Ed.). New York, NY. McGraw-Hill Education.

Kotler, P., and Keller, K. L., 2015. Marketing management, global edition (pp. 194-209).

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