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Explaining the factors that determine demand and supply of houses in the UK during the above period
Table of Contents
Introduction ............................................................................................................................................ 3 1. Industry Analysis of Toyota ................................................................................................................. 4 1.1 Internal Factors ............................................................................................................................. 4 1.2 Macro Analysis .............................................................................................................................. 4 1.3 Micro Analysis ............................................................................................................................... 6 1.4 SWOT Analysis............................................................................................................................... 6 2. Developing a Segmentation and Targeting Strategy .......................................................................... 8 2.1 New Product of Toyota ................................................................................................................. 8 2.2 Identification of Relevant Segmentation Criteria ......................................................................... 8 2.3 Rational and Justification of Segmentation Strategy .................................................................... 9 2.4 Targeting Strategy ....................................................................................................................... 10 3. Positioning Strategy for Toyota Prius.............................................................................................. 10 3.1 Key Positioning Objectives .......................................................................................................... 10 3.2 Positioning Strategy and Communication Plan........................................................................... 11 4. Marketing Strategy for Product Life Cycle Stages ............................................................................. 12 4.1 Product Life Cycle (PLC) .............................................................................................................. 12 4.2 Suggested Marketing Strategies at each PLC Stage .................................................................... 13 4.2.1 Introduction Stage Strategies .............................................................................................. 13 4.2.2 Growth Stage Strategies ...................................................................................................... 14 4.2.3 Maturity Stage Strategies .................................................................................................... 14 4.2.4 Decline Stage........................................................................................................................ 14 5. Long Run Competitive Strategy for Toyota Prius ............................................................................ 14 5.1 The Strategy for Competitive Advantage.................................................................................... 14 5.2 Appropriate Strategy for New Hybrid Toyota Prius .................................................................. 15 5.3 Perceived Value Analysis............................................................................................................. 15 Conclusion ............................................................................................................................................. 16 References ............................................................................................................................................ 17
Introduction
UK automotive industry can be considered as a backbone of the UK economy and generally produces around 50 billion annual turnover, generating nearly 10 billion in net valueadded to the economy. The UK automotive industry employs nearly 730,000 employees in retail, manufacturing and aftermarket sectors with nearly 145,000 employees directly employed in manufacturing in 2010, this report suggests that the market is quite saturated and competition is very high (SMMT, 2012). Figure 1.1 shows the auto manufacturer market share in the UK 2010 end year.
Apart from making cars, Toyota UK produces many other types of automobiles such as coasters and SUVs. In this report, appropriate marketing strategies for a new/innovative Toyota product will be explored and discussed in a precisely manner
laws. Different government traffic and motor vehicle laws in the UK forced Toyota and other automotive companies to provide several facilities to passengers for their safety (Department for Business Innovation and Skills, 2006). For example, drivers visibility, air bag, braking of the car etc. In addition, environmental laws related to vehicle air pollution and oil consumption and other relevant acts greatly affect the thinking of the consumers and consequently Toyotas sales are also affected (Toyota UK, 2012). Economic: Toyota is known as a flag of economic progress which employs tens of thousands of people directly, and thousands of people indirectly. Toyotas contribution to steel business, glass sector, aluminium, copper, iron, plastic, lead, rubber, and vinyl cannot be ignored in stimulating the UK economy (Toyota, 2001). In fact, the company has dominated the twentieth century on the basis of its unique economic phenomenon. However, the recent economic downturn and a series of structural schisms in the UK have a major impact on the performance of the automotive industry include the Toyota. Some major impacts of economic downturn include: slowdown in the car market, suspension of production, delay in new models, and decline in sales due to financial problems of the people and businessmen (Reiter, 2008) Sociocultural: Today, people like to travel long distances using a nice and new car which makes them feel comfortable. The Toyota products have transformed the society and changed the thinking and lifestyles of the people by bringing undreamed-of levels of mobility. For example, the new Toyota hybrid has become a status symbol for the UK and USA (Anderson, 2005). Other two significant sociocultural aspects of hybrid vehicles are environmental concerns and fuel efficiency. There are even many laws exist in the UK that require a vehicle environment friendly and average a certain miles per gallon. Technological: The internet technology has a great influence on the sale of Toyota products. A study showed that more than 60% users buy cars without taking a test drive (Which, 2009). They actually use websites to compare the products of different companies and make a purchase decision. In addition, the company recently introduced hybrid technology to take competitive advantage within the industry as well as to provide powerful technology-based features to users. Environmental: Toyota Company has established many R&D centres to develop fuel efficient vehicles to satisfy the environmental standards and safety regulations and also to fulfil the growing demands of the consumers (Toyota, 2011).
Legal: The Toyota Company follows several legislation and technical directives with legal nature. These legislations include fuel emissions, taxation, intellectual property law, competition law, and consumer safety laws (Toyota Global, 2012b).
WEAKNESSES
UNFAVOURABLE
INTERNAL
o Well-known brand and strong reputation o Reliable, efficient, affordable, and faster vehicles o Variety of models satisfy customer lifestyle o Research and development activities o Hybrid technology o Cost leadership pricing strategy o Ability to deal with crisis o Fuel efficient vehicles o Implementation of lean manufacturing approaches
OPPORTUNITIES
o Weak organisational structure o Weak profitability o Inability to keep balance between changes in demand and price o Inability to manage international network of franchises and subsidiaries o Large amount of debt o Decline in overall sale
THREATS
EXTERNAL
o Enhancing products image by introducing environmental friendly vehicles o Opportunity to introduce solar power vehicles o Introducing and promoting ecology-friendly cards o Opportunity to penetrate larger market scope o Continued expansion to new segments and new markets
o o o o o o o
Continued economic downturn Rapidly increasing material prices Increasing competition Changing interest and exchange rates Rising oil prices Change in demographics Tightening emission regulations and standards o Appreciating Japanese Yen against Stirling Pound
The above analyses helped the author to identify key threats to Toyota which result in weak profitability of the company as shown in table 1.2. Table 1.2 Results of key issues to Toyota
Therefore, as a senior marketing executive of Toyota UK, the author has decided to select a vehicle with hybrid features which can satisfy above requirements. This product is named Toyota Prius (Toyota Hybrid, 2012).
In the above table, geographical, demographic, and psychographic segments are clear but there is a need to provide justification of behavioural segments. Therefore, the next section illustrates the rationale and justification of behavioural segmentation strategy.
The above diagram shows the priority of hybrid owners on the basis of technology, income, and environment. According to Cohen (2004), the market segmentation matrix can also be used to prioritize selected segments within the matrix for new products. Table 1.4 demonstrates how above consumer benefits can be loaded in the matrix using 1-4 (low to high) scale Table 1.4 Prioritising market segments
It is evident from the highest total of pioneers followed by Green lovers that they are most suitable segments for Toyota for its new hybrid vehicle i.e. Toyota Prius. Therefore, the next section will demonstrate the strategy of targeting these two behavioural segments.
The positioning strategy is incomplete without an efficient communication plan based on considerable tools and techniques as a means to inform, persuade, and remind consumers directly or indirectly about the products and brands (Kotler and Armstrong, 2010). Table 1.7 presents the communication strategy and budget plan to address particular segments. Table 1.7 Communication strategy
Table 1.8 Key characteristics of PLC PLC STAGES Introduction Low High cost (per unit) Negative Selective Opportunists Some Growth Swiftly increasing Average cost (per unit) Positively rising Concentrated Pioneers Emerging Maturity High Low cost (per unit) High More concentrated Decline Falling Low cost (per unit) Falling Selective
4.2.2 Growth Stage Strategies At this stage where growth is inevitable, Toyota needs to focus on expanding the business and rapidly increasing the market share using porters cost leadership strategy which will eventually increase the market penetration, market share and brand awareness for Hybrid products (Ferrell and Hartline, 2010) 4.2.3 Maturity Stage Strategies The need of product differentiation becomes vital when it comes to maturity stage of PLC.As mentioned earlier Toyota has less market share in the UK as compared to other automotive manufacturers, the reason behind this is a lack of product differentiation strategy. On the other hand, other companies are focusing on either product differentiation or niche market. As Toyota is a global company it is focusing on cost leadership and market segmentation strategy which makes it one of the biggest automotive company in the world. As far as the UK is concerned at this stage of a product Toyota needs to employ a product differentiation strategy for its new hybrid product in order to increase its market share (Ferrell and Hartline, 2010; Pride and Ferrell, 2011) 4.2.4 Decline Stage At this level of a product Toyota can consider; entering into the new and emerging markets, cost cutting strategy, value adding or value chain strategy, and segmentation strategy (Pride and Ferrell, 2011).
The customer value map in figure 1.10 shows that Toyota Prius is capable of providing better customer value due to its leadership position in Green autos.
Conclusion
It is concluded from the above discussion that Toyota is currently the market leader in producing Hybrid products but the organisation faced weak profitability in the past due to several factors summarised in table 1.2. For its new product namely Toyota Prius, the company needs to target and position pioneers and green lovers in the early phases of PLC using various communication channels such as print media, electronic media, and internet. In addition, several marketing strategies for each phase of PLC are also suggested in this report where Porters generic strategies, price penetration strategy, and heavy advertisement are prominent. Finally, it is also concluded that differentiation strategy is appropriate for Toyotas new hybrid product in order to compete in the marketplace in the long-run.
References
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