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Prius. Easy on gas. And now, easy on the wallet.

DA512 The context of new product development
Kevin Smeekens & Stijn Weterings

This is done by analyzing the market strategy of Toyota for the Prius and finding out if this was successful and why it was or was not. In the end is a reflection on the learning development and further areas for development.Abstract: This report is about our learning activities and learning development during the assignment “The context of new product development”. easy on the wallet. we choose the four success factors to analyze why the prius was a big success and what made the prius a success. 2 Prius. These four concepts together are the analysis of the Toyota Prius giving us a better view on why and how it became a success as the first ever mass produced hybrid car. We also choose the product life cycle and the adoption theory to get insights in how and to whom a car is sold in certain stages of its life. Easy on gas. We choose for market orientation to get better insights in for which the prius was developed. The analysis of the Toyota prius is done by researching ad creating four marketing concepts which fits the case. . And now.

Market Strategy & theories Theory Decline 3.1 Clarity 3.3 Interfunctional coordination 04 05 06 06 06 06 06 06 06 07 07 07 08 08 08 08 09 09 09 10 10 10 10 11 11 11 11 12 12 12 13 13 14 14 14 15 16 16 16 17 18 Why the Product Life Cycle? 3.3.3 Credibility 3.2.1 Theory Maturity 3.2 Applying the concept Decline 3.2 Applying the concept 3.2 Majority 3.1 Introduction 3.4 Applying the concept 3.3.2 Growth 3. . Consistency 3. And now.1 Market Orientation Product Lifecycle 3.1 Theory Innovators & Early adopters 3.2.Table of contents: 1. Introduction 2. easy on the wallet. Competitor focus 3.3 Maturity 3.2 Applying the concept Interfunctional coordination Theory 3.3 Laggards 4.1.1. Easy on gas.2.3 The car market Competitor focus 3.2. Toyota and the Prius 3.4 Adoption Theory Adopter Groups 3.4 Competitiveness Costumer orientation Growth 3.1 Introduction 3.1. Conclusions 5.1 Costumer orientation 3.4. Reference list 3 Prius.2 4 C’s 3.

which is closely connected to the life cycle. We choose the successful prius mostly because we wanted to analyze a real product. at first the market orientation. we had to make a marketing analysis of a successful of failed product. 4 Prius. . for which market is the prius developed. We also choose the product life cycle to see how the prius was marketed and tried to sell in the beginning stage and how its sales continued afterwards. The last concept we choose was the adoption theory. The successful product was the Toyota prius. the context of new product development. Secondly we choose to analyze the four C’s. The adoption theory gave us insights in how the sale of a car goes. And now. Why the prius did became a successful car while other former hybrid models were hardly sold. the success factors of the prius. while a television station is more a brand and now a real touchable product. We decided on the following four.1. To analyze the marketing and the strategy of the prius we had to choose at least three marketing concepts to get better insights in the product. who are the first to buy it and why and when does the mass starts to like and buy the car. while the failure was the commercial television station Talpa/Tien. Introduction For the assignment DA511. who are its potential consumers and why does the prius attract to this group. easy on the wallet. This all together resulted in a marketing analysis of the successful Toyota prius. Easy on gas.

it grew till market leader with nowadays a market share of 42% in Japan. Easy on gas.000 cars in 6 years. The prius 2 became an international success with so far over 500.2. which is know by people for the reliability of the car they build and service the costumers get. Lately Toyota works very hard creating an innovative image for them. Japan Toyota was a very big and fast growing car manufacturer.000 pieces sold all over the world. nowadays still made and being the best selling car ever with over 23 million pieces sold. And now. The first version of the Prius was introduced in Japan in 1997 and became a small nation success with a sell of around 160. the prius is a big step forward in innovative cars. Toyota and the prius The brand Toyota was created in 1937 when Kiichiro Toyoda set up the company Toyota Motor Company of TMC. In 2004 the new prius was introduced which became the European and America car of the year 2005. In its home country. 5 Prius. A very good sell compared to other attempts of hybrid cars. which was set up in 1918. In 1965 Toyota introduced the first version of the Corolla. . This company was set up with money his father earned with the Toyoda spinning and weaving company. easy on the wallet. During the fifties and sixties Toyota started exporting cars to America and Europe to become a world wide car company. While still growing Toyota has build up a very good name.

It gives you information about the wands and needs of the market. first of all it is hybrid car. It is important to make sure everyone recognize there role in adding value to the product.3 Interfunctional coordination A product never develop itself. To be able to get a higher market share requires several superior market values. competitor focus and interfunctional coordination.1 Theory Market orientation is a very wide concept which holds many topics. not only at a certain moment.1. 3. being the target market of the prius.1.3.1. it needs the help of many people to develop to good selling product. the competition. The focus and coordination of all these people needs to done well to stimulate them in developing the product. Values which your product has. According to the article [article 1] we found on market orientation there are three main components being. Marketing strategies & theories 3. but also how the buyers will evolve over time.1. Easy on gas.1. . production.1 Costumer orientation Information about costumers is very important for companies. Therefore many companies spend lots of time and money into researching costumers and their needs. 3. For who is the prius developed. enabling them to change their products to the wishes of the client. We have chosen this marketing concept to get a better view of the market for which the Toyota prius was developed.1. a big issue is the companies which create the same products as yours. Since there are not many 6 Prius. 3. and enables you to develop your product especially for this market.2 Competitor focus Knowing your costumers is not the only part about marketing. easy on the wallet. It should help us get insight into the need and wands of the costumers and why this made Toyota develop the prius. it helps them getting to know the need and wands of the costumers. To enable us to get insight to a certain depth we choose a focus in this concept. Understanding you’re own and your competitors strengths and weaknesses enables a company develop a better product which beats the opponents at the market.1 Market Orientation The concept of market orientation is meant to create a better view on the market and helps to define your specific market. costumer orientation.2 Applying the concept The market of the Toyota prius can been in mainly 2 different ways. but your concurrent’s don’t. engineering.1. 3. And now.1. It is important to see who will buy your product. To achieve this companies have developed a structure in which all factors. 3. and marketing work together to increase efficiency and to make sure no unnecessary steps are taken. design. who are its potential buyers and why do these people want to buy a hybrid car.

but after the small success Toyota made there they decided to export the prius2 to America and later also to Europe. Educational wise the buyers are mainly well informed and higher educated. The other market in which the prius is in is the so called C-segment. This assistant is able to park the car anywhere without any help from the driver.2 Competitor focus The segment in which the prius is in is the C-segment. And now. In this age group there is no difference between male and female concerning the buying of the prius. The most important fact about the buyer is that they should be willing to buy an environmentally friendly car and they should even be willing to pay more for this car. the corolla with an astonishing 23 million pieces sold already. Because the prius is not the cheapest car in the segment. The people who buy the prius are very likely to be married and have family responsibilities.1. Volvo c30. Next to the engine the Toyota prius advertises with the fact that it is a very complete car for its segment. The segment in which al medium sized family cars are is. it costs about 10. next to the prius this is the segment for the Volkswagen golf. it needed to have different superior values to be able to beat the competition. The consumers.competitiors yet the market is pretty small and very much dominated by Toyota. the car full automatically parks it. 3.000 euros more then for example the Kia.1. the costumers and consumers. the people who actually buy the prius are midlife people in the age of 30 to 50 years old. 7 Prius.2. 3. not especially for the prius but for all the car Toyota builds. because of its low operational costs. 3. Easy on gas. Although this are no guarantees the structure inside the company needs to be well working to run and business this big and successful. They are called the upper midclass which mostly has an administrative of professional occupation. in which there is much concurrence because of the many cars that are in it. Kia Cerato and many more. From a marketing plan for the Toyota prius [article 2] we got information about the specific people in Europe the prius was developed. this being to extra superior values. and therefore did not researched and thus are we not able to fully discuss this topic. Toyota is the third largest car manufacturer in the world and is holding the record for the best selling model. . Skoda Octavia. it is standard very complete with things like air-conditioning and a parking assistant. Next to these two main extras of the prius the brand Toyota is widely know for its reliability and innovativeness.2. There are mainly two groups.1 Costumer orientation For who is the Toyota prius firstly developed? The first version of the prius was only available in Japan. The biggest superior value is of course the hybrid engine.3 Interfunctional coordination The research and development structure of Toyota and in particular the prius is an aspect we did not focus on. easy on the wallet. There also the market leader in there home country Japan and there expanding much in America and Europe at the moment.2. and with any newly developed car being a success we assume that the inside structure is performing in a good way. the prius was not developed for them but it could be a good alternative for leasing. BMW 1 series. The costumers are car dealers and companies. which makes the car using less petrol to the mile and causing much less exhaust gasses to be produced.1.

2. The slogan of Toyota. 8 Prius. commitment and consistency. therefore many words with a C are used varying from. Consumer.2. . clarity. Using the four C’s should give us a better insight in the success of the Toyota prius. The four P are made for thinking product wise.2.2 4 C’s The four success factors of marketing are closely connected to the four P’s of marketing. Many costumers find it more convenient to buy a product over the internet of telephone with a credit card. consumer communication. consistency. change. The P of place is now changed into convenience. 3. The clearest one is competitiveness which can be seen as communication. cost. The cost of the product are connected to credibility. 3. And now. According to an article [article 3] we found the most used words are. convenience and communication. The promotion of products is replaced with communication of products. What used to be called prize is now changed into cost. promotion of the product. Promotion is manipulative while communication should be interactive by using phone numbers or websites. and when that is know the companies will try to create that product.1 Clarity Clarity means keeping the message to the costumers simple and understandable. and seeing where the competition is. first of all the environmentally friendly engine which saves money and the completeness of the car.2 Applying the concept 3. The prize of the product is not the only thing that matters anymore. What used to be product is now called consumer (wands and needs). it’s about the cost to satisfy a costumer. today tomorrow Toyota is a very clear slogan basing on the reliability of Toyota. driving to a store and the convenience of buying a product. connection. credibility and competitiveness are not the most frequently used word.2. Clarity and consistency both have areas which belong to costumer. cost. competition. a shop is no longer the only place of buying products. a product should get the credits for what it is worth. easy on the wallet. this includes for example. an aspect which is frequently used when the brand is promoted. while the four C’s are made are made for thinking costumer wise. The four C’s used in the presentation are somewhat connected or other words for the four C’s that are mostly used.3. Instead of developing products and then try to sell them to a mass market doesn’t work anymore. Nowadays research is done to find out what the costumers want. convenience. Why the prius did became a success where other former hybrid cars failed. Easy on gas. keeping the products consistent and clear to the costumer to fulfill its needs and wands. not more or less. The meaning of the C’s and P’s is closely related the only problem with C’s is that because of its newness there is not a standard yet. When the prius is brought into the attention of people it used several aspects. These terms are all closely related to one of the four main P’s.1 Theory The four C’s given in the presentation.

For this segments can it is very complete and has many luxuries extras. Since it is in the credibility of the C-segment the car has a high value because it is offering much for a car in this segment. What Audi is for Volkswagen is Lexus for Toyota. therefore Toyota is very consistent. Toyota is very well able to handle the competition there. The other competition Toyota has is the whole C-segment. The brand Lexus is owned by Toyota. since there in the middle of the segment if we talk about the prize and they offer a very complete car. easy on the wallet.2. the Honda Insight and the Lexus RX400. 3.2. 3. The car advertises with being a very complete car for this segment. from the cheap foreign cars to the exclusive BMW 1 series. And now. but the Honda is a two person coupe. 3.2.4 Competitiveness There is not much competition between hybrid cars. . 9 Prius. There are two other mass produced hybrid cars.2. Easy on gas. the prius is by far the world leader with a share of over 90%. which has several superior values over the competition being the hybrid engine. which several luxuries feature. it produces the more expensive higher class cars. the middle sized family cars. These two main strong points of the brand and the car are always used in commercial for the brand and car.3 Credibility The prius is a car for the C-segment of the market. and the luxury extras like the parking assistant. and not a c segment family car.2 Consistency The commercials of Toyota and the prius are mainly based on reliability and the environmental friendly characteristics of the car.2. Therefore the Honda insight is the only real competition.2.

The early adopters of the product will like it and therefore other people get interested. Because the sales increase a lot faster then the increase in promotional expenditures the costs get lower.1 Theory The product life cycle is about the life of a product in the market. This means that additional customers start buying. The prices remain the same of fall slightly. When this wouldn’t be done by the company the people wouldn’t be aware of the product or retail outlets won’t know that the product is available so they won’t sell it.1.1 Introduction This is the first period of the product life cycle. The company had heavy expenses to introduce the product. Because of the high costs there are no or even negative profits in this stage. Maturity and Decline. Introduction. . The market strategy of a company must change as the market. Every stage of the product life cycle has its own needs for the marketing strategy. 3.3. They have to inform potential customers. Also the costs per unit for manufacturing are lower because of the higher production.3 Product lifecycle 3. competitors and buyers change over time. Growth. 3. delays in expansion of production capacity.3. Easy on gas.3. In this stage the promotional costs are increased to stay ahead in the competition with other companies. higher sells and the same or a bit lower price the profits rise. Because of this combination in lower costs.3. And now. induce product trial and secure the distribution in retail outlets. The company tries to get as much money as possible in this stage and therefore new product features are launched and the distribution is expanded. easy on the wallet. The product life cycle consists of 4 phases. 10 Prius. technical problems because the product is new and customer reluctance. The reasons for this slow sales growth can have different reasons like distribution to the dealers. This is a period of slow sales growth.1.2 Growth This period is about rapid market acceptance and therefore the sales climb rapidly.

by sticking to a basic design except for minor changes and efficient working in the factories. but it is slowing down.3.3. This Maturity stage can be divided into 3 phases. 3.1. In the beginning (20’s & 30’s) this were mostly significant technical innovations like for example balloon tires. Because of increased competition the profits stabilize or decline.3. The stable phase is when the sales flatten and the market gets saturated.1. easy on the wallet. For the reason for this we have to go more than eighty years back in time. The Model T motorcar of Henry Ford I was brought down in fifteen years from $780 to $290. Also there are no extreme technological improvements in this market. a growth. The competition on the car market is strong and there are new cars introduced all the time. This is because there are no new distribution channels to be filled. General Motors knew that they couldn’t match Ford in production know-how or pricing so they decided to work towards yearly changes.2 Why the Product Life Cycle? When we look at the case of the Toyota Prius. All the American car manufacturers were putting more and more importance on styling. . 3. In the fifties they ran out of significant technical innovations and they had to look for new ways to sell cars every year or 2 years.4 Decline This is a period when the sales are going down and that the profits go down to zero. For this Product Life Cycle we make use of a marketing plan for the Toyota Prius introduction in the United Kingdom. In the decaying phase finally the sales are declining and the customers switch to other products. 11 Prius. In this phase also the promotion budgets are cut and the products can be withdrawn from the market.3. Normally this phase is longer than the previous phases. Easy on gas. The sales which are taking place are based on population growth and the demand for replacement. Because the price was already extremely low competition over price was very unattractive for other car manufacturers. a stable and a decaying phase.3.3 The car market In the previous part we already told that it is weird that a product which can last more than 20 years and without extreme technological improvements in the market has a Product Life Cycle of only 3 years. it is weird that a car which can last more than 20 years has only a Product Life Cycle of approximately 3 years. Therefore we start with a short part about the market’s history and then we continue with analyzing the marketing strategy of the Toyota Prius regarding to the Product Life Cycle. shock absorbers and fourwheel brakes.3 Maturity In this period there is a slowdown in sales growth because the product has achieved acceptance by most potential buyers. To stimulate customers to buy the product and to get rid of the products the prices are cut down. 3. And now. In the growth phase the sales are still growing. The lower sales give an overcapacity. It is interesting in our opinion to look what the causes of this short Product Life Cycle are and especially how a car manufacturer manages to guide his product throughout the stages of a Life Cycle successfully.

To make sure that the cars will be sold at the dealers and that the dealers will give quality information the staff is trained for the new car and the dealers receive a lot of information about the new car. In the introduction phase it is also very important to get everything ready for the introduction like dealers. And now.4.2 Growth In the growth stage the promotional costs are very high and there are all sorts of ways in which they do this. cars started to look old very fast and people wanted to buy new cars all the time after only a few years. In the beginning this was only happening in the United States.1 Introduction In the introduction phase it is important to get people aware of the new product. easy on the wallet. Also the second hand cars dropped in price rapidly which made the Life Cycle of a car very short. Because there were new cars every year or two years. Toyota does this by awareness mailers.4. A lot of potential buyers are reached in this way before the car is on sale. Also there are again tests with the car to let people know how the car is driving. They do this for example by television. .3.3. This stimulates people to buy. Easy on gas. 3.3. print and billboards. press releases and exhibitions on motor shows.The car market was becoming an imitation of the women’s fashion stylists. 3. 12 Prius. but after a while this marketing strategy became normal throughout the whole car market.4 Applying the concept 3. distribution and production. As it is important for people to know if the car is driving good and that they can have a bit of reluctance the first buyers are getting some extra’s. Because there are no experiences of people having the new car. pre-testing for magazines gives people some information how good the car is driving. and those first adapters will tell others about the car.

The dealer activities become more important and the marketing is getting more specific in focusing on the target group.3. Also in this phase the whole marketing campaign is evaluated.3.4 Decline In the last phase of the Product Life Cycle the promotional costs are cut down a lot. Also a lot of people are using the product already which means that people will hear from them how good the product is. Easy on gas.4. And now. . 3. easy on the wallet.3 Maturity In the Maturity stage the promotional costs are lowered and the focus is getting more from attention to satisfaction and trust. In this way they try to reach the more conservative people.3. The sales are dropping and there is an overcapacity.4. 13 Prius. At Toyota they plan to have a sales promotion in this phase for selling the car to some late buyers and in that way they can get rid of the old model.

The goal for marketers is to move consumers through those stages to adoption. Evaluation 4. Awareness 2. At this point the consumer is trying the new product and is determining the value the product has for him. When the marketers try to move the consumers through the adoption process there are various factors which influence the adoption process. There are five stages through which adopters move. Interest 3.4. 3. Adoption In this stage the consumer becomes aware of the new product but he doesn’t have a lot of information and knowledge about it. These characteristics are individual readiness for new products. The consumer adoption process is about the mental process through which an individual passes from learning about the new product to adoption. This is an important factor but the importance differs in different situations and individuals. These are 14 Prius. The consumer is considering if he shall try the product or not. This can be for example the costs. And now.3. The rate of adoption of a product is about all the product characteristics which influence the time which is needed for getting acceptance and the adoption. individual readiness (Adopter Groups) we are going to explain further in the next part.4 Adoption theory 3. easy on the wallet. the effect of personal influence. Easy on gas.4. .1. compatibility and complexity. One of the characteristics named. Adoption is an individual’s decision to become a regular user of a product. Consumers can be divided into five adopter groups.1 Theory The consumer adoption theory is about how potential customers learn about new products. try them and finally adopt or reject it. The consumer decides to make full and regular use of the new product. risks.1 Adopter Groups First we start with a short explanation of the individual readiness for new products. Mostly companies are focusing their new products on the innovators and early adopters. 1. Personal influence is the effect one person has to another person in the sense of attitude or buying behavior. It is most applicable in the evaluation stage and has more influence on late adopters than on early adopters. The consumer gets interested and starts looking for information. relative advantage over other products. rate of adoption and the organizations’ readiness for new products. Trial 5.

4. 3. Then they move to more personal and in depth information to make the consumer well informed. 5.2 Applying the concept In general it can be seen that Toyota is looking at the five stages through which adopters move. 15 Prius. 1. Mostly skeptical people who adopt an innovation only after a majority tried it. 4. People in this group are suspicious of change.the groups who can be the easiest attracted to try a new product and after they have accepted the other adopter groups will follow. Toyota stimulated the innovators and early adopters with sales and the new technology and in this way they attracted them to buy the car. Easy on gas. The people in this group are mostly younger people. Toyota is also giving people the opportunity to test drive a car before they buy it. This may help them through the testing stage after which people will make the decision to buy or not. . mix with other tradition-bound people and adopt the innovation only themselves when the product becomes a bit of a tradition itself. Innovators Early adopters These are often people who like to try new ideas. Therefore the company should have good knowledge about who the innovators and early adopters are and how to direct communication to them. are having higher social status and a better financial position. And now. Those innovators and early adopters will experience the car and influence the Majority by their opinion. Early majority Late majority Laggards 3. In the beginning of their marketing campaign they are focusing a lot on awareness and creating interest. 2. Early adopters are the opinion leaders in their communities and they adopt ideas early but carefully. This group consists with people who are tradition-bound. This will help getting the Majority faster through the adoption process. Then the customer will move to the stage where he will make the decision to test the car and if he wants one or not. easy on the wallet. A large group with people who adopt a product earlier than average.

.3. Therefore Toyota tries to catch this group in the end of their product life cycle when it has proved to be good and in the way that they can be best reached.1 Innovators & Early adopters In these groups they like to try new ideas and technologies. but in this case Toyota focused on people of approximately 40/50 years old with better incomes. When this group is satisfied with the product they will have a high influence on the Majority. And now.2. The Toyota Prius had the advantage that it is the first and only hybrid car on the market.3 Laggards The last group. the laggards are difficult to reach. 3. Therefore the innovators got interested by the car.2. Normally this group consists of young people with better financial positions. Therefore they will only start buying when they here of other people that it is trustworthy and of good quality. The Majority needs trust in the product and will only buy it when the product proves to be good. Often this group has a weaker financial situation. Toyota has the name to be trustworthy and this group cares also more about the environment than younger people. Toyota tries to catch these groups by giving promotions to first buyers. 16 Prius. in this way they will be attracted to the new product.2. 3. Easy on gas. easy on the wallet. They will only shift to buying when the product has a sort of tradition in it and when it is really trustworthy. By discount and by the personal contact with the dealer. Toyota tries to stimulate this trust by more personal dealer promotion and to promote more on events where the specific target group is coming.4.4.2 Majority When the Innovators and early adopters are using the product and are satisfied with it they will tell to the Majority.4. The innovators and early adopters are often high in social status and therefore a high influence on the Majority.

Why the prius did become such a successful car? The biggest reason for the prius to become a success is its hybrid engine. It a new technique which might scare people away. The car is standard very complete and many extras are available. the world was ready for a hybrid car. Easy on gas. Overall Toyota introduced the prius at the right time. people like it. The fuel keeps getting more expensive and with the prius being affordable for many people it saves them money on the fuel. but the name of Toyota made them believe that although it was new and different it still was a reliable car.4. If a new company. know for its reliability. from family’s businessman. not mainly because of the low exhaust gasses it produces. but mainly because of its high mile to the gallon number. Conclusion The Toyota prius is the worlds first mass produced hybrid car and although other hybrid cars were no success the prius is sold very good all over the world. the Toyota offers a very high amount of value for money. The second part which help the sales of the prius is the very good name of Toyota. 17 Prius. The prius is therefore usable for many different kinds of people. Next to that the prius is very well able to stand up in the busy C-segment. unknown to the crowd would have produced the same car it would probably never been such a success. Everywhere people welcome the prius with open arms. the prius fits all. saving the environment and the wallets of its consumers. And now. easy on the wallet. . From there home country Japan to the United States and also in Europe now. Although the segment has cheaper cars.

easy on the wallet. Slater & John C.customfitfocus.doc Marketing 101 .Reference list [Article 1] Market orientation.deviantart. .com/p/articles/mi_m1038/is_n2_v37/ai_15419777/pg_1 Toyota Prius. Easy on gas. Publication: April 2003 By Andidas.com andidas. By Roy McClean. And now. By Philip Kotter Link [Article 2] Link [Article 3] Link [Book 1] 18 Prius. March-April 1994 By Stanley F. and superior performance. http://findarticles. Marketing Communications Plan. Narver.com/marketing-1. customer value. Publication: Business Horizons.4 C's versus the 4 P's of Marketing.net/projects/academic/MaketingCommunications _ToyotaPriusMarketingPlan. Principal The Custom Fit Communications Group http://www.htm Marketing management.

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