An Analysis of Toyota’s Marketing Strategy

Surendra Bhandari1 [available at: ] Abstract Toyota was established in 1937 in Japan. First time it introduced its product Corona in the US in 1965. By the 70’s, Toyota was the best-selling import brand in the US. During the 80’s, it started manufacturing vehicles in the US. In 2006, it had globally become the second largest car seller and third largest car sellers in the US having more than fifteen percent market share. It is estimated that by 2008 it is going to be the number one car producer and seller both in the US and across the world. This profound success of Toyota is associated with its most proficient market strategy. The case of Toyota notably proves that how important is market strategy in the life of a company to be a market leader.

1. Mission Toyota’s mission statement is as follows: “To sustain sustainable growth by providing the best customer experience and dealer support.” (Toyota, 2007) Customer satisfaction is the driving force for Toyota, which inspires it to provide the highest quality products and services. “Kaizen” is a word that Toyota upholds, which means “continuous improvement” of its technology, products, and services. In short, Kaizen for customer satisfaction is Toyota’s mission. Toyota further explains its mission as follows:


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Toyota Corolla was first introduced in Japan in 1966 and in the US in 1968 as a first generation Toyota Corolla. And this is just the beginning. tenth generation of Toyota Corolla was already launched with significant technological improvements. and other technical improvements. This concept could have easily turned into product maturity and decline. 2007) 2.00 US $.000. 2). Popular Economy Car: Toyota is best known for ‘popular economy car’. Toyota’s hybrid cars can be taken as another example. environmental friendliness. We are hard working. We are creating jobs. Cutting-edge Technology: Toyota simply did not stop to the concept of ‘popular economy car’.“Around here our values are just like yours. the prices for the four varieties cars range 10. 2007) It produces eight varieties of cars. looks. It has garnered its success by selling the concept to the consumer. It has successfully branded the concept of ‘popular economy car’.00 US $. It started producing hybrid cars in 1995 however till 1999 Japan was 1 . and Toyota Avalon (No. It has also become profoundly successful in segmenting. and positioning. comfort. But Toyota continuously engaged in improving technology – design. based on the pricing reports generated by over ten million visitors. and make them satisfied.000. Since then roughly in every three years it is being developed and marketed in a new model. targeting. These competencies are as follows: i. 8). We are active in community. Toyota Corolla (No. by producing cars matching to the concept.000. fuel efficiency. We are building cleaner greener cars. By 2006. three are Toyotas – Toyota Camry (No. ii. For example. three distinctive competencies of Toyota are remarkable. build trust with them.” (Toyota. Among them. Distinctive Competencies Among others. out of top ten cars. 4). (Kelly Blue Book. As a result. We celebrate our diversity. These distinctive competencies appeal the consumers. and one variety ranges slightly over 20.00 US $. three varieties range 15.

Trends / Conditions Among many other factors. and demand for high level of safety and comfort are the most significant factors that are influencing the trends and conditions of automobile marketplace. 2008). These trends are important because. it became successful to capture a large chunk of US market. 2007) Similarly. Today’s automobile sector can be best described as one of the sectors that are trying utmost to respond these important marketplace demands. demand for energy efficient and greener cars. demand for low operating cost. The bad news is that some of the leading automakers are shedding thousands more jobs. Based on these demands.3 million US jobs. Today. based on 45% highway driving and 55% city driving with annual 15.the only market for its hybrid cars. iii. and US $ 675 billion revenue in the US economy. there is both good and bad news for the auto industry. Low Operating Cost: Why consumers purchase Toyota? The simple answer is that Toyota’s cars are distinctive with the properties of low operating cost. it is selling almost seventy five percent of its hybrid cars alone in the US market. including for Toyota. 2 . automobiles are responsible for 13. For example. (Fuel Economy. a survey carried out by Toplin Strategy Group in 2007 has revealed that 73% of Prius owners had bought Toyota Prius because of financial incentive to purchase the vehicle such as lower sticker price or lower operating cost than other choices. Some of the automakers are also projecting downward market trends. 3.000 miles Toyota Prius has been proved to be the most fuel efficient car than any of its competitors such as Honda Civic Hybrid. Coming to 2005. (Marketing Green. Good news is that there is surprisingly robust vehicle sale in the market. Ford Escape Hybrid. and Lexus GS 450.

9 millions are sold alone in the US. In 2007. 53 millions new cars are sold in 2007. Doing so will require continued investment in hybrids. whereas Ford Motor Co. and Chrysler has taken a 15% year-on-year sales dive.000 hybrid cars yearly. Out of them. it is estimated that there will be 806 million cars and light trucks on the road. However. The years of 2004 through 2007 will long be remembered as a pivotal period in the automobile industry as during this period gasoline prices started a sea change among US consumers that is finally creating a significant demand for fuel efficient vehicles. down 0. Consumers 3 . including GM. Union of concerned scientists in their 2007 report state that Toyota has regained second place overall in the environmental rankings as well and is the only automaker to make consistent improvements on its global warming score since 2001. makers has been lukewarm at best. In terms of global sales. around the world. 15. Currently. the number of cars and light trucks is estimated to reach above 1 billion.On a year-on-year basis.9% of market shares in 2006. Ford launched its first hybrids. As a result. these vehicles burn nearly 260 billion gallons of fuel yearly and by 2020.5%. has showed a year-on-year improvement posting 12. Toyota has the best global warming performance in six out of ten classes and better than average performance in the rest. out of them 244 million will be in operation in the US alone. were greatly encouraged in their own efforts to bring more hybrids to the market. Globally. If past trends continue. has stayed mostly flat. and other carmakers.S. Toyota sales has surged 10.1% sales gain. In terms of sales in the US market.5%. Toyota may overtake Honda’s global warming score within two years. Kentucky plant to enable to manufacture 48. Responding to the demands of consumers Toyota has expanded its investments in Georgetown. General Motors Corp. Toyota is in second position following GM. response to hybrids from U. Toyota is in third position having 14. this has lead to the phenomenal demand for Toyota’s Prius hybrid car.

making Toyota the world’s largest carmaker. 4 .8 million in 2006. The big news is that Toyota is most likely surpassing GM in global sales by 2008. the company plans to sell 10. while the US based Big Three struggle. language and culture of every nation with fair corporate activities. Based on these principles. Organizational Objectives Toyota has set seven fundamental objectives. Among them. Similarly. contribute to economic and social development of communities around the world through corporate activities. pursue growth through innovative management. foster individual’s creativity and teamwork value. up from 8. uses visual control so that no problems are hidden. hybrid technology as they are with that of Toyota models. 4. create and develop advanced technologies and provide outstanding products and services to customers. it has clearly set fourteen principles that are widely considered as Toyota’s Ways. to dedicate in providing clean and safe products and enhance the quality of life everywhere through better production and services is the main objective of Toyota. It has increased its capacity to manufacture over 1. It believes in a continuous process flow to bring problems to the surface. In short. It standardizes the tasks and processes as the foundation for continuous improvement and empowers employees by which it further enhances its ability to use only reliable and thoroughly tested technology that serves the customers. its other objectives are: to honor the law.S. On a global scale. and work with business partners for mutual benefits. even at the expenses of a short-term financial goal. uses pull system to avoid overproduction. and works like tortoise and not the hare.5 million vehicles yearly in North America.4 million vehicles by 2009.generally aren’t as impressed with U. Toyota takes management decisions on a long-term philosophy. To achieve these objectives and their effective implementation. Toyota is being more strategic.

It produces more than two dozen varieties of products. and light trucks with safety and comfort measures in place. In May 2006. and popular economy cars. On top of that. SUVs/Vans.00 billion yen) and earned net income of 15. manufacturing of the Camry began in Guangzhou. by becoming a learning organization through relentless reflection and continuous improvement of its products and services. All of its products are globally very popular. In November 2006. the Kentucky plant. In the financial year 2006-07.948.06 billion US $ (23. On the product front besides its two dozen already launched products. (Toyota. On top of that. a key vehicle in Toyota’s North American lineup. Lexus has launched its new flagship model. has started manufacturing the first Toyota hybrid vehicle to be made in North America. the LS. which in October 2006 celebrated 20 years of production. it implements the decisions rapidly. hybrids.0 billion yen). 5 . Toyota can be exemplified as a case that has achieved its organizational objectives successfully. respect the network of partners and suppliers.Similarly. it sold its products of 226. its organizational objectives are further substantiated by its idea of developing exceptional people and teams who follow the philosophy of Toyota. green. Toyota was engaged in a variety of projects designed to solidify its foundations while continuing to grow. till 2006 it had sold more than 7 million Toyota Corollas alone in the US. 5.17 billion US $ (1.644. and learn from the practices. the Camry Hybrid. 2006) In 2006. while in the United States. the US is the biggest market for Toyota. the Texas plant began producing the new Tundra truck. Strategic Business Unit Toyota offers energy efficient. Its products are sold in over 200 countries across the globe. It believes in making decisions slowly by consensus thoroughly considering all options and once the decisions are taken. For example. China. In manufacturing. in consolidated terms. and the new global Camry went on sale. several new projects were started around the world.

following the establishment of the Asia Pacific Global Production Center in Thailand in August 2005. & Corolla. Toyota Motor Kyushu. these were created to spread Toyota’s manufacturing knowledge and skills throughout the world in pace with the rapid growth of Toyota’s overseas manufacturing.S. To support this statement. three products are chosen here – Camry. Ltd. in February 2006. safety. as part of Toyota’s efforts to respond to the diversification of energy. based on the philosophy of providing “the right car. Toyota is striving for promoting efforts to develop environmentally friendly technology and vehicles. Boston Consulting Group Matrix Based on the Boston Matrix. and the European Global Production Center in the United Kingdom in March 2006. at the right time. 6 . and has worked on R&D relating to plug-in hybrid. 6. Inc.. Toyota has established the North American Production Center in the U. All these three products are well established and the growth is exciting. Prius. in the right place. From this point on. Established as branches of the Global Production Center in Japan. In R&D side. The only challenge is Toyota needs to maintain its Stars. In human resources development sector.” and in accordance with the infrastructure and customer needs of each region. in 2007 Toyota has introduced a flex fuel vehicle in the Brazilian market that will run on 100% bio-ethanol fuel. and Toyota Motor Tohoku Co. These all fall into the category of Star as they are holding high market share and high market growth. the market situation of Toyota is Healthy. has increased its manufacturing capacity. Toyota has focused its efforts on three key areas: environment. These are creating fantastic opportunities. In addition. and energy.In Japan. has begun full-scale operations at its engine factory. And. It has made a special effort in the area of the environment by expanding its lineup of hybrid vehicles. it seems that for at least a couple of years Toyota will maintain its Stars.

very popular throughout the world since it was first introduced in 1966. Australia. The first generation Camry was introduced in 1983 and in 2007 the sixth generation Camry has been introduced. the North American Car of the Year 2004. The sixth-generation Toyota Camry is the first generation in which it has been available as a gasoline/electric hybrid. with the only exception in 2001. EPA fuel economy estimates for the 2007 Toyota Camry Hybrid 38 MPG in city and 40 MPG on highway. the top range Camry models are seen as executive cars. nearly 160. The Camry has been the bestselling car in the US. Europe.000 units had been produced for sale in Japan. In 1997 it became the bestselling car in the world. This product strategy of Toyota Corolla has helped it to be continuously in the Star quadruple. The Prius first went on sale in Japan in 1997. and North America. Today. Its market share in the US is growing each year. more than 7 million Toyota Corolla cars have been sold. in 2004 it was the number one selling car in the US in its segment with over 30 million sold as of 2007. and Japan. By the end of 2003. In some markets. As a result. In the US alone.Toyota Corolla: It is a compact car. China. In 7 . it has brought in market its 10th generation model in 2006 in Japan and has been introduced to the US market since October 2007. and the European Car of the Year 2005. and replacing it with an all-new model every four year. Toyota Camry: It is a mid-size car manufactured in the US. its largest consumer market. for nine of the last ten years starting in 1997. including the Car of the Year Japan in 1997/98. Over the past 40 years. EPA has recently revised environmental standards and the Prius 2007 has been acknowledged as the most fuel efficient car sold in the US. Toyota Prius: It is a hybrid electric vehicle and one of the first such vehicles to be massproduced and marketed. The Prius has won several awards. it is manufactured in 16 countries in the world. and worldwide in 2001. It has been almost steadfast in face-lifting each generation after two years. one Toyota Corolla car has been sold on average every 40 seconds.

For example. 7. it has introduced a flex fuel vehicle in the Brazilian market that will run on 100% bio-ethanol fuel. It has successfully got high level of positioning in the mind of the consumers with its brand and distinctive competencies as discussed above disseminating through integrated market communication (IMC) techniques. Organizational Strategy for Growth Toyota has already got market over 200 countries across the globe. Toyota has become successful in managing product life cycle. more specifically it introduces product and keeps the product growing without letting them to be matured and decline. Each professional is expected to spend time out in the field talking 8 . Only in 2006. Its exceptional organizational strategy for growth is importantly nurtured by its strategy working with around 522 subsidiaries around the world and successfully creating a wider market chain around the globe. Prius market share in the US was very negligible but by 2005 out of its total sale the US alone had consumed about seventy percent. It has introduced hybrid electric car (Prius) mostly for the market in the US. and EU. Toyota has diversified its product with a brand of right car in the right place. Its mission: to predict consumer trends and create a lineup of cars and trucks to capitalize on them. By upholding this strategy of product development. On top of that in each two year it improves looking of its product and in each four year transforms model into new one. Japan.2000. Another way of Toyota’s organizational strategy for growth is that it reads the public mind through its research department that monitors the industry and keeps tabs on demographic and economic developments. This ambitious strategy of market penetration is associated with its proficient demographic and psychographic segmentation and targeting. it sold 8.52 million of its products and has planned to be a number one car producing and selling company by 2008.

to car buyers.89 million units.322 business leaders surveyed by Fortune have named Toyota as one of America’s most admired companies.go to the scene and confirm the actual happenings. and Chrysler is gradually declining. Toyota is already bigger than Chrysler in the US and is about to pass Ford by 2008. Market Share While looking at the market share of Toyota in the US market since 1980 to 2006. In the 80s GM’s market share in the US was above forty-five percent.5 million cars and trucks in the US market alone. In 2006.2 percent to 2. While we compare its net income from 2004 to 2006. Similarly. it sold 2. Because. it is clearly shown that its net income is increasing each year.64 trillion yen. Toyota has become the world’s most profitable automaker. In 2007.8 percent compared to the fiscal year of 2006. Ford. it is realized that its market share is continuously growing. It is estimated that the consolidated vehicle sales for the fiscal year 2008 will be 8.8 percent to 1. Toyota’s presence in the US is now so prominent that the 3. Its net income has increased by 19. The revenue for the fiscal year 2008 is estimated to be 25. On the other hand. which is an increase of 13.23 trillion yen. market share of its three major competitors GM. For example its net 9 . Toyota’s net revenue for the fiscal year 2007 is 23. The Japanese have a name for it: genchi genbutsu . its operating income has increased by 19. For example. By being successful in increasing market share. So in a twenty-five years time Toyota has outstandingly tripled its market share in the US. All of these figures marked record high. On the financial side.94 trillion yen.00 trillion yen. in the 80s Toyota’s market share in the US was about 5% and that has risen to above 15% by 2006. in the 80s Ford had more than twenty-three percent market share but by 2006 its market share has come down to sixteen percent. But by 2006 GM’s market share has shrunk to 24%. 8.

its marketing strategy – segmentation. One of the key factors for designing segmentation and targeting. EU. China.00 to 30. and Indonesia. Canada. In fact. Australia. Toyota’s analysis is always based on the condition of market. purchasing 10 . kindness.income for the year 2004 was 1. and positioning is nurtured by its variety of offers and product attributes. 9. For environmentally sensitive people it has Prius – environmentally green car. Its products range with different prices from US $ 10.00 plus. it has designed its market strategy at different levels – global level.000.180 million yen. On top of that US is its first priority being the biggest market. it offers them different variety of trucks.998 million yen that increased to 1. But has also identified its focused market such as the US.162. Likewise.372.171. Elements of Marketing Strategy Toyota’s segmentation and target market is guided by its philosophy of ‘right car in the right place’.260 million yen in 2005. and national level based on the assessment of customer needs and choices. Toyota has employed both demographic and psychographic form of multiple segmentations and targeted its market on that basis. The economy class cars are targeted to lower and middle level income people and the luxury cars are targeted to higher middle and higher income group people. where is bio-ethanol potential. economy. Toyota claims that its products harmonize ecology and emotions. and excitement. With a variety of product attributes it targets different age group and professional groups of people. For example. it has segmented all the countries across the globe as its market. regional level. Likewise. US consumes almost 30% of its products. those who are truck lovers or professional who need trucks. For example. India. Further. for sport people it has sport cars. It is because. it has offered 100% bio-ethanol fuel car in Brazil.000. and in 2006 that further increased to 1. targeting. Toyota focuses its products in market with comfort.

which is the biggest opportunity for Toyota. Further. it has acquired more than 15 percent market share in the US in 2006. is another very successful mechanism of advertising and promotion. the market share for its hybrid is growing exponentially. it is the first automobile producer that introduced hybrid in the market. and consumers’ choices. Elements of Market Planning Toyota has adopted three important elements in its market planning – green. there seem more opportunities for Toyota than threats. there are some threats that cannot be denied. it is also ahead of its competitors in technology front. Toyota has become successful to garner the market opportunity. Likewise. Its competitors’ market share is declining each year. Toyota’s most illustrated product – Prius has not got much success in Europe and its market share is declining in Japan itself. On its blog.capacity. 10. Toyota closely pays attention to the voices of its customers and provides responses to a large amount of inquiry. hybrid products of its competitors are not successful. On the whole. Toyota has upheld a very strong promotional strategy using integrated market communication (IMC) tool. Toyota and its competitors have similar segmentation and targeting but in creating positioning Toyota has come off much ahead than its competitors because of its products’ attributes. Being based on these three important However. Opportunities: Toyota’s market share is growing each year. From about 5 percent market share in 1986. On top of that. safety. Threats: Besides opportunities in the marketplace. and Chrysler have become more strategic and are being focused on 11 . Toyota blog (http://blog. its competitors – GM. For example. Based on these factors Toyota is launching its global motorization strategy with leading-edge technology. At the same time. Further. Ford. and low operating cost.

(2007). available on .shtml . The Most Researched Sedans. it can be said that Toyota is an outstanding case for learning how to build and implement market strategy. and branding its product in the mindset of the customer. Prentice Hall. Toyota is a notable example that proves how important is marketing strategy in the life of a company and managers. visited on Nov. Kelly Blue Book. 27. and Prius) do fall into Star quadruple under the Boston Matrix. 20. 12 . uphold market positioning.aspx?trid=3&gclid=CKrS8rHMgI8CFTa oGgodgyqT2w#ManufacturerId=49&ModelId=286 visited on Nov.from cutting-edge technology to leading-edge technology. References CNNMoney. Marketing 2007 available on http://money. Camry. Toyota is growing with ambition to pass the GM but still GM is the number one automobile in the US and the globe. (2007). 2008 Hybrid Vehicles. Toyota can be taken as a company that has successfully achieved its mission statement. Conclusion From the perspective of marketing strategy. 22.Kevin Lane (2006). available on http://www. visited on Nov. Fuel Economy. 12th ed. http://www. successfully branded its distinctive competencies. 11. This is corroborated by the fact that all of its products studied in this paper (Toyota Corolla. Mrach 7. best use of integrated market communication (IMC).fueleconomy. 2007. America’s Best Car Companies.cnn. This success is based on its successful market strategy. Phlipe & Kotler. manage product life cycle. (2008). 2007. In quintessence. get penetration in the market. In short. and profoundly achieved its organizational objectives.

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