MBA (PROJECT

MANAGEMENT)

Marketing Management

Prepared by: Ikechukwu

Ihemelandu

Date: Nov 8th, 2010

Word Count - 4337

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Introduction
In the year 1937, Toyota Motors Co.Ltd was founded by
Kiichro Toyoda, as a subsidiary of Toyoda Automatic
Loom Works a foremost manufacturer of weaving
machinery. The first Toyota car was launched in 1947 in
Japan, and subsequently in 1959 a production plant was
established in Brazil. Toyota Motor Corporation is the
world’s foremost automaker, and currently is regarded as
the world largest manufacturer of automobiles with a
combined sale of 7.23 million units in the year 2009,
ahead of GM Motors and VW motors. The US market is
Toyota’s biggest market, and it accounts for 30% of its
total sales. Toyota motor Corporation offer a whole range
of models ranging from mini vehicles to large trucks. The
corolla range of product being their most sold model.
Evaluation of Toyota’s Marketing Strategy:
Marketing strategy dwells basically on avenues in which
companies or corporations distinguishes itself from their
competitions by leveraging on their unique strength to
offer better value to its customers. Attributes of a good
marketing strategy includes distinct market definition, a
good correlation between the companies strength and
the market needs, as well as a performance that betters
that of its competition. Toyota Motors Corporation (TMC)
operates a Multi-Market strategy as it does not limit its
business to one segment. Toyota Motors Corporation
offers a full range of product in different segments in the
automotive industry.TMC offers cars in the compact, mini,
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and luxury as well as in the large truck segment of the
automotive markets. Toyota motors marketing strategy
would be analyzed using the Porters Generic Strategies
framework, which makes the assumption that a
corporation’s strength lies in its ability to essentially
differentiate its product and services through low cost or
by the uniqueness of their product, Porters (1980). He
also made the assumption that a firm that combines both
strategies would not gain any competitive advantage
over its competitors. Toyota motors have successful
combined two strategies cost leadership and product
differentiation to gain competitive advantage over its
competition to become the world biggest automaker.
Toyota’s philosophy of having the right car in the right
place has always guided its market segmentation and
targets. Its target market has always been segmented
using demographic and psychographic form of
segmentations. Evaluating the marketing strategy of
Toyota’s hybrid brand Prius, Toyota leveraged on its
strong cost leadership and product differentiation
strength to try and gain market shares in the American
market. Toyota introduced the first Prius in the American
market in the year 2000.Its initial target market was the
early adopter of technology and the environmentalist, as
the initial concept for developing the Prius hybrid brand
was to have a more eco-friendly cars that conformed to
the regulation and standards of environmental pollution.
Toyota gained initial market shares by using a
penetration pricing strategy; it set the initial price of the
first Prius at the same price as the original Prius, which
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was lower than the prevailing market price at that time. It
leveraged on the effect of economy of scale and
experience to lower production cost which could afford it
they luxury of using the penetration pricing strategy to
gain market shares. Also coupled with the efficient and
effective Toyota’s production and distribution system,
which is assumed to be the best in the world, it is able to
meet up with anticipated increase in demand for the
product. Toyota also used the product differentiation
strategy to gain market shares, it hinged on its innovative
and continuous improvement culture to develop a model
that suited the American market. The Prius gained market
share in the USA market because of its uniqueness, it
stood out amongst other hybrid brands with its better
product performance, and superior design and quality.
The first generation Prius recorded considerable sale
success however it had a market share of 32% as against
the Honda civic Hybrid which had a market share of
55% .The first hybrid car to be sold commercially in the
US market was the Honda insight hybrid in 1999,but the
Civic Hybrid was its bestseller, Honda adopted the market
positioning strategy to market the Honda Civic hybrid it
targeted the mass market and based the design of the
Honda Civic Hybrid on the brand equity of the
conventional version of the Honda Civic which was at that
time the best selling compact car in the USA.Honda Civic
hybrid appealed to the early customer because they were
already accustomed with the features it offered and the
additional benefit of increased mileage and eco-
friendliness was a welcome add-on. After the initial
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launch of the first Prius in the US market Toyota started
an evaluation based on the pricing, performance and
social aspect of the Prius, this helped it to deduce some
valuable facts about the design, performance and quality
of the Initial Prius. All these anomalies were put into
consideration during the production of next generation
Prius. Due to the uniqueness of the new design which
made it stand out, it differentiated its self from the other
hybrid product. Its sales increased and it outsold all other
hybrid cars. Toyota shifted from its initial target market of
early adopter and eco-friendly inclined customer to the
mass market. By the end of 2007 Prius had taken the
greatest market share in the hybrid segment. By
successfully combining the cost leadership and product
differentiation strategies Toyota has been able to gain
significant market share in the hybrid segment with its
Prius brand and as at September 2010 it tops the list of
highest hybrid car sold in the USA.

The Importance and, use of Information in Toyota’s

Marketing Strategy.
The importance and use of information in a company’s
marketing strategy to gain competitive advantage cannot
be overemphasized. Most companies have marketing
information system that help them set procedures and
practices which in turn enable them analyze and assess
marketing information gathered. This information is used
in making viable marketing decision in production
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development, product pricing and distribution. It also
helps them in selecting the best ways for advertizing and
promoting their product. Toyota uses market research
and marketing intelligence activities to collect
information from the market. It uses this information in
analyzing the condition of the market, economy,
consumer’s preference and buying capacity, this it uses
in segmenting and targeting its market.
Prior to the launching of the first Prius in the US market,
Toyota carried out market research and studies on the
market preference of the consumers; it also studied the
behavioral pattern of the American consumer., these
research and surveys was done through direct
consultation with customers, dealer’s reports and from
questionnaires given to buyers of new cars. Toyota also
conducted family demos in major cities in the United
States, and used the internet to publicize and make
available useful information of the Prius. Information
gathered from these processes helped them devise an
initial marketing strategy to penetrate the US market.
Initial market research and intelligence show that the
Prius was accepted by the more tech savvy focus group,
and so the target markets for the Prius were the early
adopters of technology and innovators. Also information
gathered from research conducted revealed that they
were an increase in demand for cars that had high fuel
efficiency with the rising cost of fuel biting hard then.
Toyota also realized that most American sourced
information from the internet, thus the internet was used
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as a major medium for adverting and promotion of the
Prius. The research also revealed that American wanted
aside from environmental soundness, high technology,
affordable pricing, quality and comfort. All these facts
embodied Toyotas objectives for marketing the first
generation Prius in the US market. The First generation
Prius gained an appreciable market share in the US
Market as it sold a total of 15,556 cars within the first
year and reached a sale of 100,000 units worldwide by
2002. The first generation Prius Toyota was initially
targeted for the early adopter and innovator focus group,
but from information sourced from market surveys it
realized that the mass market segment was more viable
thus it shifted. With all these information about it
customers and target market, Toyota launched the
second generation Prius which was an instant hit. Toyota
had incorporated all the features that the customers had
initially wanted, as well making the Prius a more
appealing model to its competitions. Also Toyota was able
to gain competitive advantage over Honda with the new
Prius by coming out with a very unique design which was
one of the strong features of the Honda Civic Hybrid.
Toyota also reverted to the traditional channel as against
the web channel which was initially been used for the
sale of the Prius. This ensured that customers received
their orders on time, which was also one of the
advantages the Honda Hybrid had over the Prius.

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Correlation between Toyota Motor’s marketing
Strategy and Their overall organizational Strategy.
A company’s marketing strategy tends to dominate its
overall strategy eventually. The mission statement of
most companies usually states its corporate strategy
explicitly. Toyota strategy is outlined in three different
levels namely global, regional and national which are
based on consumer’s needs and preferences. Toyota
motor’s corporate strategy is to develop new products
and services of high quality at a better price than their
competitors, through effective and efficient modes by
continuously improving on it product and services thus
becoming the first choice for consumers. The market
strategy of the Prius when it was first launched in the US
Market correlates with Toyota’s overall strategy, in a lot
of ways, this can be seen using the 4 P’s of marketing,
which are the four vital areas that needs to be managed
in order to gain competitive advantage.
It includes thus:
Product: Toyota has overtime successfully designed the
Prius to be of high quality using the innovative hybrid
technology which it developed from the scratch. This
technology it has improved overtime since conception.
The Prius also had revolutionary features and accessories
as well as a very unique design making it stand out
among its competitors. All these are in line with its overall
strategy.

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Pricing: The cost leadership strategy of Toyota can also
be related to the penetration strategy it used in launching
into the US market due to the elasticity of the Prius
demand, which was expected to rise as prices declined
thus gaining mass appeal.
Promotion: To be the first choice of the customers,
Toyota promoted the Prius using different means such as
advertisements, sales promotion and endorsements of
the product by celebrities. The Prius was featured in
some block buster movies and TV shows to create
awareness amongst its potential customers. It also used
the internet by putting up reviews from the initial Prius
and by posting information about the Prius.
Place: In line with its strategy to continuously improve on
its product and services, Toyota setup a very effective
and efficient production and Distribution system,
popularly known as the Toyota Production system
(TPS).This made it very convenient to meet up with
customer’s demands and order.

An Analysis of how the global context has been

incorporated into Toyota’s marketing planning.
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Toyota customizes its products as well as its services to
meet up with customer’s preferences and demands in
different countries, this strategy has helped it to break
into foreign market away from its more dominant
Japanese market. This has meant that new technologies
and marketing plans, as well as a new supply chains have
had to be created ,which in turns has further helped in
maximizing the creativity of its worker. Toyota did not
take the route of acquiring other manufacturer in order to
enter the foreign market; this has helped it in retaining its
financial assets as well as focus on just the Toyota brand,
thus enabling it to establish itself as a global player.
Toyota employs different strategies one of which is
localization; here the production of its vehicle is based on
where there is demand. By producing locally in host
countries Toyota is able to stem the tide of currency
exchange rate fluctuation, and also gain a higher degree
of flexibility and thus speed up distribution. Toyota uses
various regional strategies to gain global leadership, one
of which is the home-based strategy which entails
companies servicing the foreign market from its home
base, the objective being to manufacture the product in
the home country and then export it to foreign markets.
This was the strategy used by Toyota when the first
ventured into the international market as most sales were
from direct export. This strategy was also used in the
sales of the first generation Prius in the US market.
However the recent surge in the demand for the Prius in
the US market has made Toyota have a rethink and it has
proposed localizing production of the Prius for the US
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market by building a manufacturing plant in the US which
should start production by late 2010.

Toyota’s use of e-business strategy in marketing.

Companies embrace e-business initiatives to improve the
bottom line of their business through increased
productivity and cost cutting. Toyota motors like most
other companies have adopted this initiative; it has
employed it in the bid to reduce the cost of ordering and
tracking parts and supplies as well as to implement its
most famed “Just in time” production system. When the
first Prius was introduced into the US market, to mitigate
uncertainty and enhance flexibility, it employed the use
of the web to centrally stock up the Prius while at the
same time taking orders. Dealers were made to provide
orders fulfillment using the web, this helped reduce the
cost of Prius. The high demand uncertainty then of the
Prius made using the traditional dealer channel not as
cost effective as it should have been, as a 90-day pipeline
inventory would have been required to be filled before
the cars get to the customer which would add an extra
cost. The use of the web helped in mitigating the demand
risk by reducing the lead time for the product to get to
the customer, and this ensured that the Prius launch was
a success. Though eventually, after the Prius market grew
and there was a better insight on demands it reverted
back to the traditional channel because the web channel
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was viewed as not been competitive, because it meant
having to maintain two channels for the Prius and other
Toyota products which would have been tedious.
However the web channel was still used in special
occasion and was even used to launch the 2004 model.
Toyota also were the first to use the social media
marketing network as way back as in 2000 to reach out
and attract the innovators and early adopter focus group
before the launch of the Prius in the US market, and as
the social media has gotten more popular it uses
facebook and twitter the two most popular social network
media to reach out to a wider mass audience. Toyota also
the used the internet for its advertisement and publicities
as it had already identified the internet as one of the
major source of information of the US market.

Marketing Plan for a New Product.

Introduction:
The Nigerian Automobile market is reckoned to be the
biggest south-west of the Sahara, it currently have no
fewer than 30 Brand of cars which are all represented by
franchised dealership. The Toyota Brand was initially
launched by R.T Briscoe in Nigeria in 1965 as an
exclusive distributor. Toyota Nigeria limited later came
into being and it has several franchised dealers spread
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across the country. Toyota Nigeria offers a wide range of
Toyota cars in the passenger and commercial vehicle
models. Currently the Toyota brand accounts for 70% of
the total import of new cars into the Nigeria market.
The Toyota Prius is full hybrid car and is considered as
the most fuel efficient gasoline automobile in the world. It
can be classified in the medium car segment and offer
the same functionality and features as other non-hybrid
car in the same segment.

The Market Segmentation: The market for the sale of

the Prius would be divided into two different categories
the Individual or private buyers as well as the Corporate
or business buyers, the segmentation of the market
would be based on the geographic as well as
demographic and psychographic basis.

Geographic Segmentation: The Prius would be sold

throughout the country but more emphasis would center
in Lagos and the Capital city Abuja, these cities are
locations to most corporate business establishment and
government parastatals as well as the middle and upward
mobile class. The population in each of these cities would
be in the range of about 12million and 6 million
respectively. The problems of congestion and air pollution
especially in the Lagos area would be another attribute.

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Demographic Segmentation: Both the individual and
corporate buyer would be vital to the market. The age
range of the Individual buyers would be between the age
of 25 years and 65 years and could either be male or
female, the age range fall within the working class of the
Nigerian society and the comprise of elites, the highly
informed and educated adults. They would be able to
appreciate the features the Prius has to offer as well as
be able to afford to buy it. The disposal income of this
group would be in the range of between N2.5 –N30M per
annum.
Psychographic Segmentation: The early adopter and
Technology pioneers would be the most likely to purchase
first. Most Nigerian both literate and otherwise love being
the first own new product especially automobile, this can
be attested to number of latest models of most cars
gracing the Nigerian roads. Also with the high cost of fuel
and incessant fuel scarcity that plagues the Nigeria
society most people are looking for alternatives and they
would not mind purchasing the Prius which would afford
them a car with high fuel efficiency which translates to a
lower cost maintenance in the long run. With the clamors
everyday in the media of global warming a lot of Nigeria
are becoming aware of the need to make the
environment more friendly, Nigeria been a country with a
high degree of CO2 pollution, because large volume of
cars that pile the roads.

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The Target Market:
The target market for the Prius in Nigeria would be the
individual as well as the corporate buyers. The corporate
buyer would be the various multinational, banks and
government parastatals.These establishments would be
very interested in acquiring the Prius into their car fleets
as this would help them reduce their opex cost due to its
low operating and maintenance cost.
Differentiation and Positioning of the Prius in the
Customers Mind
A SWOT analysis would be done on the Nigeria market to
determine the internal and external factors that may
affect the introduction of the Prius into the market.
Internal Strengths:

• Toyota is the largest automobile makers in the world

• Toyota cars are of high quality and very reliable

• Toyota’s efficient and effective Just-in Time

Production
• Toyota brand is the bestselling brand in Nigeria with
the corolla being its highest selling brand.

Internal Weakness:

• Understanding the mindset and culture of the

Nigerian market as it is very diverse.
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 • Weak Distribution Network and Car dealership, the
distribution network is not as robust as that in the
United states and they might not be able to caters
for very large demands.

External Opportunities:
• The Nigeria market is very large and greatly
untapped with a population of about 150 million
people 25% of these being able to afford a car.

• Introduction of the Hybrid technology which has

already being a success in the United States and
Japan. And with the incessant fuel scarcity and high
cost of petroleum product this would suffice.

External Threats:
• Competition from cars in the non-hybrid segments

• The recent recall of some Toyota Prius in the oversea

markets which has generated a lot of negative press.

• Competition from other hybrid makers like Honda.

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Positioning and differentiating the Prius in the mind of the
customer would help Toyota do away with excessive
advertizing and promotion of the Prius, it would help give
context to message on the product. It would also help in
preventing a situation where the customers would have
to position the Prius based on information received from
competitors. Using the following product positioning
strategy this can be achieved i.e;
• Benefit strategy: The benefits the Prius offer to the
consumer would be the focus, this benefits would
include a cleaner atmosphere due to the reduced
CO2 emission making for a healthy environment this
would be one of the high selling point. The air
pollution in the big cities in Nigeria is already a case
for concern and environmentalist and the
enlightened amongst the target market would
embrace the offer.
Also the reduced fuel consumption and low cost of
maintenance would appeal to the target market, as
most Nigerian both individuals and corporate bodies
are looking for ways to reduce their operating cost
especially when it has to with energy because of the
fact that they have to fuel not only their cars but also
generators and home as well as in the offices due the
poor energy generation in the country.
The Prius is new in the Nigerian market with no
known competitor in the same product category, but
with competition from cars in other product category
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 even within the Toyota brand. The Prius would
differentiate its self from the rest with its unique
design that stands it out, as well as with it novel
hybrid technology, which is innovative, revelotionary
and pioneering. Also the Prius has a proven efficiency
and reliability track record in the US and Japan. Even
the recent recall in the US market of some of the
Toyota models won’t affect the sales as similar
models in Nigeria were not affected.
Marketing Objective: The marketing objective for the
Prius would be set bearing in mind the activities of the
company like production sales and purchasing.
The marketing objectives would be as follows:
• To introduce the Toyota Prius into the Nigerian
Market, and educate the target market of the benefit
within 12 months, this would be done by having
various mini motor fair in Abuja and Lagos the initial
target market; this would help showcase the Prius.
Potential customers would be allowed to do a test
drive of the Prius so as to get a them a firsthand feel
• Gain market penetration within 24 -36 months, a
projected sales target of 5,000 units should achieved
within the first year of launching into the market, and
a subsequent 10% increase for the next year. The
asking price for the Price would be $23,000 (N3,
507,500) for the standard option and $30,000(N4,
575,000) for the full option.

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 • The Prius would be customized to suit the Nigeria
environment, and it would be readily available to
cater for demand. The just in production system of
Toyota would be able to handle this.
• The Prius would be promoted using different media
i.e. the internet TV adverts and radio jingles. A sum
of N150m who be set aside for the promotion of
sales.

Market Mix: To market the Toyota Prius model the 4P’s

technique would be used to draw up an operational
strategy to be able to make decisions that center on the
customers in the target market in order to create
awareness and generate sales. The four P’s are;
• Price: The Pricing strategy to be used would be the
market penetrating strategy. The Prius would be
introduced into the Nigeria market at a very
competitive price probably at a price commiserate
with that of the corolla which is currently the best
selling model in the Nigerian market, and possible it
major competitor. This would be a unique selling
proposition, and would encourage sales. Also
financing and Lease options would also be introduced
to encourage the corporate customers that buy in
large quantities.
• Product: The Prius offers the customer features not
available in other cars, which makes it very distinct

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 and coupled with its unique design it stand out
amongst other car. Also the Toyota brand is
synonymous with quality and reliability the world
over and is a mainstay in the Nigeria market and the
Prius would hinge on that to gain insight. The
additional features the Prius offers would be used as
a unique selling proposition.
• Place: The Toyota dealership in Nigeria which
spreads across nine cities would be used for the
sales and distribution of the Prius. Lagos and Abuja
with the highest concentration of urban dwellers
would be the first place the Prius would be sold.
Order processing would be done through the internet
to help facilitate sales. Dealers would be encouraged
to promote sales through personal sales to
customers and organize presentations on the Prius to
get the potential buyers accustomed to it.
• Promotion: The initial promotion of the Prius would
involve the education and the creation of awareness
of the product which will then be followed up with
generating some sort of excitement about the Prius
at the same time focusing on selling the unique
features to customers. The PUSH strategy would be
used this would ensure that every available channel
of distribution would be used to push the Prius into
the market. Discounts would be offered to encourage
the various channels to promote the Prius
aggressively, and this would in turn reduce the need

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 for excessive advertizing. Buzz advertizing would
also be used to spread the word by word of mouth.

An indication for the cost of the marketing strategy would

be put at about N240million this involves the cost of the
marketing campaign for the promotion of sales of the
Prius and this is estimated at about N240million, which
would be spread across a 12months period starting from
January and ending in December.
A return on investment would be expected in about 2
years.

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i
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www.toyota.com
www.toyotanigeria.com.

RDI LECTURE MODULE, Marketing Management