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1.1. OVERVIEW - INDIAN AUTOMOBILE INDUSTRY
Over a period of more than two decades the Indian Automobile industry has been driving its own growth through phases. The entry of Suzuki Corporation in Indian passenger car manufacturing is often pointed as the first sign of India turning to a market economy. Since then the automobile sector witnessed rapid growth year after year. By late-90's the industry reached self reliance in engine and component manufacturing from the status of large scale importer. With comparatively higher rate of economic growth rate index against that of great global powers, India has become a hub of domestic and exports business. The automobile sector has been contributing its share to the shining economic performance of India in the recent years. With the Indian middle class earning higher per capita income, more people are ready to own private vehicles including cars and two-wheelers. Product movements and manned services have boosted in the sales of medium and sized commercial vehicles for passenger and goods transport. Side by side with fresh vehicle sales growth, the automotive components sector has witnessed big growth. The domestic auto components consumption has crossed rupees 9000 crores and an export of one half size of this figure. Overview Of Automobile Industry The Indian automobile industry is going through a technological change where each firm is engaged in changing its processes and technologies to sustain the competitive advantage and provide customers with the optimized products and services. Starting from the two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles and the luxury vehicles, the Indian automobile industry has achieved tremendous amount of success in the recent years.
As per Society of Indian Automobile Manufacturers (SIAM) the market share of each segment of the industry is as follows:. The market shares of the segments of the automobile industry
The automobile industry had a growth of 15.4 % during April-January 2007, with the average annual growth of 10-15% over the last decade or so. With the incremental investment of $35-40 billion, the growth is expected to double in the next 10 years. Consistent growth and dedication have made the Indian automobile industry the secondlargest tractor and two-wheeler manufacturer in the world. It is also the fifth-largest commercial vehicle manufacturer in the world. The Indian automobile market is among the largest in Asia. The key players like Hindustan Motors, Maruti Udyog, Fiat India Private Ltd, Tata Motors, Bajaj Motors, Hero Motors, Ashok Leyland, Mahindra & Mahindra have been 2
dominating the vehicle industry. A few of the foreign players like Toyota Kirloskar Motor Ltd., Skoda India Private Ltd., Honda Siel Cars India Ltd. have also entered the market and have catered to the customers’ needs to a large extent.
Not only the Indian companies but also the international car manufacturing companies are focusing on compact cars to be delivered in the Indian market at a much smaller price. Moreover, the automobile companies are coming up with financial schemes such as easy EMI repayment systems to boost sales. There have been exhibitions like Auto-expo at Pragati Maidan, New Delhi to share the technological advancements. Besides, there are many new projects coming up in the automobile industry leading to the growth of the sector. The Government of India has liberalized the foreign exchange and equity regulations and has also reduced the tariff on imports, contributing significantly to the growth of the sector. Having firmly established its presence in the domestic markets, the Indian automobile sector is now penetrating the international arena. Vehicle exports from India are at their highest levels. The leaders of the Indian automobile sector, such as Tata Motors, Maruti and Mahindra and Mahindra are leading the exports to Europe, Middle East and African and Asian markets. The Ministry of Heavy Industries has released the Automotive Plan 2006-2016, with the motive of making India the most popular manufacturing hub for automobiles and its components in Asia. The plan focuses on the removal of all the bottlenecks that are inhibiting its growth in the domestic as well as international arena.
The key players contributing to the growth of the sector are discussed below.Top Ten Players in Indian Automobile Sector The domestic players as well as the foreign players dominate the Indian automobile sector. Top Ten Players in Indian Automobile Sector • • • • • • • • • • Maruti Suzuki India Hero Motors Limited Hero Motors Limited Tata Group Bajaj Auto Limited Mahindra Group Ashok Leyland Yamaha Motor India Hyundai Motors India Limited Toyota Kirloskar Motor Private Limited Honda Siel Cars India Limited 4 .
the company name was changed to: Signify the separation of the founders' work life from home life.1. Production of the Model AA passenger car started in 1936. where eight is regarded as a lucky number. Simplify the pronunciation. 5 .2. Kiichiro Toyota. and eight is the number of strokes it takes to write Toyota in Katakana. Although the Toyota Group is most well known today for its cars. and electric sewing machines which are available worldwide. Although the founding family name is Toyoda. it is still in the textile business and still makes automatic looms (fully computerized. and Give the company an auspicious beginning. was established as an independent company in 1937. of course). which was used in the first Model A1 passenger car in May 1935 and the G1 truck in August 1935. Toyota is considered luckier than Toyoda in Japan. COMPANY PROFILE The story of Toyota Motor Corporation began in September 1933 when Toyota Automatic Loom created a new division devoted to the production of automobiles under the direction of the founder's son. the division produced its first Type A Engine in 1934. Soon thereafter. Toyota Motor Co.
was established (which lasted until July 1982). the first production model of Toyota in 1936 6 . Replica of the Toyota Model AA. In April 1956 the Toyota dealer chain was established. Because of severe shortages in Japan. In 1950 a separate sales company Toyota Motor Sales Co. For example. the trucks had only one headlight on the center of the hood. Commercial passenger car production started in 1947 with the model SA. military trucks were kept as simple as possible.During the Pacific War the company was dedicated to truck production for the Imperial Army.
France. Turkey. Cars from these plants are often exported to other countries. South Africa. Brazil. Poland.ORGANISTION STUCTURE OF THE COMPANY HEADQUARTERS: TOYOTA CITY. the Corolla. Argentina and Czech Republic. Toyota New Zealand assembled vehicles until 1998. Toyota also builds and sells cars in China in a joint venture with Tianjin Xiali. and more recently India. Australia. Canada. including its most popular model. the United Kingdom. 7 . JAPAN ASSEMBLY PLANTS OVER THE WORLD Toyota has factories all over the world. Indonesia. Toyota has manufacturing or assembly plants in the United States. manufacturing or assembling vehicles for local markets. when it switched to importing cars from Japan and Australia.
Toyota Car Model: Innova Camry Avalon Matrix Corolla 8 .
Prius TRUCKS: Tacoma Tundra SPORTS UTILITY VEHICLES( SUVs): 4runner 9 .
the LS.S. In human resources development. increased its manufacturing capacity. with trainees passing on what they learn to team members on their return to their plants. the Camry Hybrid.Land cruiser OVERVIEW In 2006. and the new global Camry went on sale. In November. Toyota Motor Kyushu. 10 . In Japan. and the European Global Production Center in the United Kingdom in March. the Texas plant began producing the new Tundra truck. while Toyota Motor Tohoku Co. which in October celebrated 20 years of production. Lexus launched its new flagship model. 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. following the establishment of the Asia Pacific Global Production Center in Thailand in August 2005. started manufacturing the first Toyota hybrid vehicle to be made in North America. On the product front. the Kentucky plant. Inc. Ltd. In May.. began full-scale operations at its engine factory. a key vehicle in Toyota’s North American lineup. Established as branches of the Global Production Center in Japan. The centers educate trainers for local manufacturing plants in all regions. several new projects were started around the world. while in the United States. In manufacturing. Toyota was engaged in a variety of projects designed to solidify its foundations while continuing to grow. emphasizing the importance of this best-selling car. in February. In Japan. Toyota established the North American Production Center in the U. a new Corolla range was introduced. China. manufacture of the Camry began in Guangzhou.
” and in accordance with the infrastructure and customer needs of each region. Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide. based on the philosophy of providing “the right car. It made a special effort in the area of the environment by expanding its lineup of hybrid vehicles. Pursue growth in harmony with the global community through innovative management. in the right place. 11 .In R&D. while honoring mutual trust and respect between labor and management. long-term growth and mutual benefits. while keeping ourselves open to new partnerships. regardless of position. In addition. as part of Toyota’s efforts to respond to the diversification of energy. safety and energy. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. Toyota focused its efforts on three key areas: environment. Foster a corporate culture that enhances individual creativity and teamwork value. PERCEPTS Be contributive to the development and welfare of the country by working together. at the right time. Work with business partners in research and creation to achieve stable. GUIDING PRINCIPLES Honor the language and spirit of the law of every nation and undertake open and fair corporate activities to be a good corporate citizen of the world. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. From this point on. in faithfully fulfilling your duties. in 2007 Toyota introduced a flex fuel vehicle* in the Brazilian market that will run on 100% bio-ethanol fuel. and has worked on R&D relating to plug-in hybrid. Toyota will continue to promote efforts to develop environmentally friendly technology and vehicles.
Member of the Board 1) Domestic Sales Operations Group and Overseas Planning Operations Group 12 . Be at the vanguard of the times through endless creativity. Be reverent. **Changed Organizational Changes Chairman Vice Chairman President TITLE Executive Vice President Executive Vice President Executive Vice President Executive Vice President Senior Managing Director Senior Managing Director Senior Managing Director Senior Managing Director Honorary Chairman Senior Advisor. strive to create a warm. homelike atmosphere. and show gratitude for things great and small in thought and deed MANAGERIAL INFORMATION Executives Board of Directors NAME Fujio Cho* Katsuhiro Nakagawa Katsuaki Watanabe Tokuichi Uranishi Kazuo Okamoto Takeshi Uchiyamada Akio Toyoda Takeshi Suzuki Hiroshi Takada Shinichi Sasaki Shin Kanada Shoichiro Toyoda Hiroshi Okuda** *Promoted. Be practical and avoid frivolity. Be kind and generous. inquisitiveness and pursuit of improvement.
Sales and planning functions. price and supply-and-demand strategies 2) Government & Public Affairs Group / General Administration & Human Resources Group The transfer of some divisions/departments of the General Administration & Human Resources Group to the Government & Public Affairs Group. have taken place as follows: Before Changes • General Administration & Human Resources Group • Public Affairs Administration Dept. have been integrated.The Domestic Sales Operations Group and the Overseas Planning Operations Group have been reorganized. which were divided by region. (transfer) • Tokyo General Administration Div. Purpose As a global business management function of Toyota's global headquarters. and to implement the "most-suitable growth strategy from a global perspective" though product. including Japan. • Tokyo Secretarial Div. to allow close coordination between TMC and various regions. After Changes • Government & Public Affairs Group • Public Affairs Administration Dept. • Tokyo General Administration Div. (transfer) • Tokyo Secretarial Div. (transfer) 13 . i.e. domestic and overseas.
Asia. Oceania & Middle East Operations Group • Taiwan Office (transfer) • China Office (transfer) 14 . Oceania & Middle East Operations Group. Before Changes • Divisions/departments not belonging to a Group • Taiwan Office • China Office After Changes • Asia. Before Change • Housing Group (Housing Company) After Change • Housing Group (name changed) Purpose To reflect the achievement of the original objective to reinforce operational structures through the introduction of the "company" system 5) Divisions/departments not belonging to a group. China Operations Group The transfer of some divisions/departments to relevant groups.Purpose To optimize the structural organization and distribution of human resources by consolidating the divisions and departments relevant to government & public affairs 3) Production Control & Logistics Group Before Change • Production Control & Logistics Group After Change • Strategic Production Planning Group (name changed) Purpose To create a name that reflects a strengthened stance toward planning that considers the actual situation of global production activities 4) Housing Group (Housing Company) The name of the Housing Group (Housing Company) has changed.
Equally important.Purpose To clarify the chain of command and to optimize the structural organization and distribution of human resources As a result of the above changes. Another way to align our interests with the larger interests of the community is through technology. By the end of 1997. the number of divisions has increased from 228 to 229. So. as well as improving vehicular safety. we will introduce the world's first new-energy transport that is commercially competitive with conventional automobiles. Survival and growth in our industry will hinge on developing technologies for reducing environmental impact of our products and operations. We must be a company where people think seriously about the role and responsibility of their company in the world. That is when we will put a hybrid-electric passenger car onto the market in Japan. for example. it actually could save money for car owners. GROWTH Lasting growth for Toyota will depend on aligning our interests with the larger interests of customers and the community. 15 . the value of its potential fuel savings could prove greater than its cost premium over conventional vehicles. Our economic and industrial contribution in each region grows. Our hybrid-electric car will have a gasoline engine to generate electricity or provide supplementary power to the wheels. as we globalize our operations. Photos and text on the following pages introduce some of the technologies we are developing to position Toyota as an environmental leader. It is twice as fuel-efficient as conventionally powered vehicles of comparable size and performance.
A direct-injection system that makes gasoline engines more efficient Hybrid-electric systems that double fuel efficiency and reduce noxious emissions Pure electric. Those technologies include.. Toyota.4 percent U. "zero emission" vehicles that alleviate urban pollution Fuel-cell systems that could transform the automobile in the 21st century. had a 15. retail market share a year earlier.S. retail market share than Ford Motor Co. Toyota plans to enter small car segment in India 16 . MARKET SHARE OF TOYOTA Toyota Motor Corp. grabbed more U.. We have introduced or demonstrated new power train technologies in the past year that will make Toyotas run cleaner and greener than ever. Japan's largest automaker.S.PRIORITIES OF TOYOTA IN GROWTH STRATEGY Fortifying our product line Asserting a competitive edge in technology Accelerating globalization Reclaiming market share in Japan Cultivating demand in new business sectors Measures for asserting a competitive edge in technology have centered on environmental themes. in early November and it was less than one share point behind General Motors Corp..
World’s second largest automaker wants to get offensive in the Indian domestic auto market. Toyota is very much interested in launching a small car here in the segment currently dominated by Maruti Suzuki and Hyundai. Tata also has a decent presence in the market with their Indica range of diesel vehicles. Toyota is at the moment carrying out a feasibility study for launching such a vehicle in the domestic market where it has models like the Innova and Camry amongst others. They have had an incredible success with their stopped Qualis model and are selling Toyota Innova in large numbers. T Ino, director (marketing), Toyota Kirloskar Motor Pvt Limited has expressed that the Indian auto market is a huge one and has the capacity to involve more players in the small car segment. Toyota has a variety of interesting models in its global lineup, which it can consider to launch in the Indian market. Some of these are Vios, Platz, and Passo. The company also expects to break even here in India this year with all the accumulated losses were expected to be wiped out during 2005. They also plan to invest around Rs 130 crores during the current year to enhance efficiency.
1. AVALON 2. CAMRY 3. CAMRY SALORA 4. COROLLA ALTIS 5. MATRIX 6. PRIUS 7. 4RUNNER 8. HIGH RUNNER 9. LAND CRUISER 10. SEQUOIA 11. SIENNA
PRICE:As far as pricing strategy of Toyota is concerned. They are focusing on the very segment of the market not only particular segment. Basically they are focusing on official and business class people
CAR MODELS (INDIA) INNOVA
EX- SHOWROOM (MUMBAI) AMOUNT IN INR. 8,01,738
India's car population may be growing but the growth is mainly concentrated in the small car sector, and not without reason. With increasing interest rates making buying cars costlier and the government slapping new duties on larger vehicles in addition to the existing favorable tax regime for smaller cars, even premium players are wading into the small-car scene. Indian passenger car sales rose by 11.79 per cent between April 2007 and March 2008 to 1.2 million units. Competition in the small car segment is set to increase in 2009, with planned launches by Maruti Suzuki (A-Star and Splash), Honda (Jazz) and as yet unnamed models from Ford, GM and Volkswagen. Japanese carmaker Toyota, all set to surpass General Motors as the world's largest, is the latest entrant when it made its intentions clear on the occasion of the laying of the foundation stone for its second factory in India. The decade-old Indian joint venture of the Japanese automaker, Toyota Kirloskar, is building its second plant at Bidadi, about 40 kilometers from India's IT hub of Bangalore, with an upfront investment of Rs14,000 crore ($329 million) to manufacture a range of passenger cars and multi-utility vehicles. Toyota is the majority partner with an 89-per cent stake with Kirloskar owning the rest. Karnataka chief minister B S Yeddyurappa unveiled the foundation stone for the new plant that will have a test track and additional space for suppliers and other vendors. The ceremony was attended by Toyota senior managing director Akira Okabe, chairman Ryoichi Sasaki, vice-chairman Vikram Kirloskar and managing director Hiroshi Nakagawa.
400 people. Top officials confirmed that the company will soon be introducing its newly designed compact car in the Indian market. Although Okabe confirmed that the new product will be the cheapest in the Toyota stable. indications are that it maybe priced higher than its Indian competitors. the initial design features indicate that it can be exported to other markets in Asia. Daihatsu. though it may be included in future plans.The modular plant.'' 20 . We have basic concept of the new car ready and very shortly we will finalize the design of the car. The small car will not compete with the upcoming Nano of Tata Motors. However. will have an installed capacity of 100. Tata Motors and Bajaj Auto can rest easy for the time being.000 units annually and will employ about 2. We plan to have petrol as well as diesel versions. Toyota's group company. touted to be the world's cheapest car. ''We are working on the new design. Though the new compact car has been designed for the Indian market. Vikram Kirloskar said as much when he commented. which is expected to be spread over 130 acres of land. will not be involved in designing the compact new car. The arrangement of this additional amount required for the plant would be worked out later. to be commissioned by 2010.'' The plant which is being set up will see an initial investment of Rs1400 crore. The factory will be ready by mid-2010 and we are yet to finalize the launch date of the new car. The model is yet to be finalized. A new test track will be included in the second plant. But this initial investment won't include certain other costs like installing robots and other automation equipment.
GENERIC STRATEGIES Generic strategies were used initially in the early 1980s.are the products differentiated in any way. Each of the three options are considered within the context of two aspects of the competitive environment: Sources of competitive advantage . They outline the three main strategic options open to organization that wish to achieve a sustainable competitive advantage. or does it focus on a very narrow.1 The generic strategies are: 21 . or are they the lowest cost producer in an industry? Competitive scope of the market .does the company target a wide market. niche market? Figure 1. and seem to be even more popular today.
but have the brand and marketing skills to use a premium pricing policy. exploiting the benefits of a bigger margin than competitors. Factories are built and maintained. The differentiating organization will incur additional costs in creating their competitive advantage. 'cost advantage' is the focus. are very good not only at producing high quality autos at a low price. Focus or Niche Strategy 22 . Cost Leadership The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. 2.' However. Differentiation 3. Focus. There is also the chance that any differentiation could be copied by competitors. Costs are shaved off every element of the value chain. Cost leadership 2. Therefore there is always an incentive to innovated and continuously improve. 3. Producers could price at competitive parity. generating a higher than average price. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. such as Toyota. 1. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments. These costs must be offset by the increase in revenue generated by sales. Products tend to be 'no frills. Toyota differentiates its product and service. For example.1. low cost does not always lead to low price. Some organization. labor is recruited and trained to deliver the lowest possible costs of production. Costs must be recovered. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage.
defined segment of a market.17 trillion yen ($11bn.59 million units in the same period. This is an example of very focused segmentation. There are potentially problems with the niche approach. With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. A company could use either a cost focus or a differentiation focus. £5. Small. With a cost focus a firm aims at being the lowest cost producer in that niche or segment.The focus strategy is also known as a 'niche' strategy. 1. A niche strategy is often used by smaller firms. targeting and positioning in a number of countries. Its strong industry position is based upon a number of factors including a diversified product range. The company is still behind rivals General Motors with 8.3% higher at 18.T ANALYSIS Strengths New investment by Toyota in factories in the US and China saw 2005 profits rise. Cost focus is unachievable with an industry depending upon economies of scale e. highly targeted marketing and a commitment to lean manufacturing and quality. The company uses marketing techniques to identify and satisfy 23 . from the small Yaris to large trucks. Net profits rose 0.4 S. Competitive advantage is generated specifically for the niche.78 million units. a niche strategy could be more suitable. against the worldwide motor industry trend.O.g. telecommunications.8% to 1. Commentators argue that this is because the company has the right mix of products for the markets that it serves. Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy. to become the World's second largest carmaker with 6.55 trillion yen.W. specialist niches could disappear in the long term.85bn). Here an organization focuses effort and resources on a narrow. The company makes a large range of vehicles for both private customers and commercial organisations. In 2003 Toyota knocked its rivals Ford into third spot. while sales were 7.
OPPURTUNITIES Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles.e. So if the car market experiences a down turn. WEAKNESS Being big has its own problems. it takes time to accommodate. then the company may miss out on potential sales due to under capacity i. Rocketing oil prices have seen sales of the new hybrid vehicles increase.g. Toyota has also sold on its technology to other motor manufacturers. Toyota markets most of its products in the US and in Japan. This is a typical problem with high volume car manufacturing. The company also maximizes profit through efficient manufacturing approaches (e. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. If on the other hand the car market experiences an upturn. Lexus has RX 400h hybrid. Car plants represent a huge investment in expensive fixed costs. as well as the high costs of training and retaining labour. Therefore it is exposed to fluctuating economic and political conditions those markets. Movements in exchange rates could see the already narrow margins in the car market being reduced. Both are based upon advance technologies developed by the organization. The World market for cars is in a condition of over supply and so car manufacturers need to make sure that it is their models that consumers want. The company needs to keep producing cars in order to retain its operational efficiency. and Toyota has it Prius. for example Ford has bought into the technology for its new Explorer 24 . Total Quality Management). Its brand is a household name. the company could see over capapacity.customer needs.
00 sports utility vehicles and pick up trucks due to faulty front suspension systems. South Korea and new plants in Eastern Europe. which is targeted at the streetwise youth market and captures (or attempts to) the nature of dance and DJ culture in a very competitive segment. while the rest were sold in Japan. Toyota is to target the 'urban youth' market. 65. with a 796cc 3cylinder engine that delivered 39. with new entrants coming into the market from China. The first vehicle was released for sale in December 1983. Europe and Australia. Initially.W. Competition is increasing almost daily.T ANALYSIS STRENGTH In an era when owning a car was a distant dream for a vast majority of Indians.5 COMPETITVE S. In 2005 the company had to recall 880. As with any car manufacturer. MUL rolled out its first car. but it proved to be spacious enough to carry four adults. with models extending at their rear! The narrow segment is notorious for it narrow margins and difficulties for branding.SUV Hybrid. Better 25 .O. The company has launched its new Aygo. Such moves can only firm up Toyota's interest and investment in hybrid R&D. The company labeled it a people's car. THREATS Product recalls are always a problem for vehicle manufacturers. The vehicle itself is a unique convertible. 1.000. The majority of affected vehicles were sold in the US. steel and fuel. Toyota did not give details of how much the recall would cost. the car was criticized for its diminutive size. The company is also exposed to any movement in the price of raw materials such as rubber. the M800. Toyota faces tremendous competitive rivalry in the car market.5bhp at an affordable price of Rs.
In April.373 units. 13.518 units in February and 15. 23. is the lack of product design capability. began eating into M800's share. February and March respectively. its sales increased to 9.technology and an affordable price due to a higher level of indigenization helped MUL achieve a dominant position in the Indian passenger car market WEAKNESS MARUTI SUZUKI’s biggest weakness. But gradually Alto. 0. Alto reported sales of 8. Also the Research and developments headquarters for engine development of Maruti Suzuki are in Japan which is a major weak point. another MUL product.350 units and in May 2004. Alto took over M800's position as the largest selling car with sale of 10. Alto For the first few months of 2004.301 units in January.016 units. they should focus on acquiring product design and lean production knowhow (as the Korean firms did in the eighties and early nineties. In the coming years. Maruti Suzuki also needs to invest in capacity and research and development in India to stay abreast of competition. slightly over M800's sales of 10.23 mn in the first week of April 2004. Analysts felt that Alto had taken the top spot because of its price reduction in September 2003 by Rs.399 units.324 and 9. 26 . selling 15.011 units in January. 8. THREAT M800 had ruled the passenger car market as the only car in the entry-level segment in the Indian automobile industry and was now facing the danger of cannibalization from one of its own family members.540 in March.000 followed by the launch of the non-AC Alto for Rs. M800 performed well.
2 million units by 2005. Innova has successfully become a category creator. Their dealers have also worked hard to provide their high levels of customer support. According to analysts. Toyota sold 3. With a change of guard at Toyota Kirloskar Motor Ltd. Last year.8 million units overseas. Effective from January 1. We will continue to meet the ever-challenging customer expectations and will come out with innovative marketing strategies. The Indian market is important for Toyota with potential to aid its growth strategy." "In the last one year. he said. Toyota Motor Corporation.1 SIGNIFICANCE Toyota's believes in putting the customer first and aims to provide the best levels of customer satisfaction as its main marketing strategy. In India.OBJECTIVE AND METHODOLOGY 2. In this 27 . replacing Sachio Yamazaki. Toyota's strategy to corner a significant chunk of the Indian market involves "superior product offering and dedicated technology". said." Yoshio Ishizaka. the Toyota Quails notched sales of 25. Toyota has taken many initiatives. which has made Innova the most successful product. the company has evolved a new strategy to capture 15 per cent market share in the Indian automotive segment. the Indian market would touch annual sales of 1.000 units since its launch last year. Atsushi Toyoshima has been appointed Managing Director of the company. Executive Vice-President. "Competition is intense in the Indian market for domestic and foreign companies.. manufacturing six million vehicles at 56 plants in 25 countries.
Third. to seek attributes like greater interior space and overloading ability. the change of leadership in Toyota's Indian division is important. Toyoshima said According to the managing director of Toyota Kirloskar Motor. the C. it provides feedback to the organization about their sales." Mr. while passenger car buyers look for better styling and improved riding comfort. with an improving lifestyle and better roads. the Indian consumer wants to take his vehicle for long drives with friends and family. also give a proper shape to company's target profit and growth. "Bangalore is an ideal location to meet all of Toyota's needs. First. the decision to introduce Innova here (India) was based on three factors. so that they can maintain a viable fit between the organizational objectives. every market research provides useful suggestions to the 28 . Second. Innova brings together the space and fuel economy of an MPV with the style.context. there is a latent desire of customers. Toyota Kirloskar Motor has described it as the first three-row seating passenger car in the Indian market 2. over the last five years. The very essence of every project related to marketing is providing a view to management for chalk out the organization.2 MANAGERIAL USEFULLNESS The marketing department can use this study to enhance their marketing strategies for better sales.segment (between Rs 5 lakh to Rs 10 lakh) of the car market has grown by 20 per cent every year. including auto components. The multi utility vehicle segment has also grown at doubledigit levels. agility and power of a sedan. skills and resources and its changing market opportunities. sales schemes and what impact does it has on the dealers and consumers. Atsushi Toyoshima. including those owning MPVs. This report helps the marketing department in taking decisions to what change in distribution channels and what should be done so that marketing problem could be sorted out and how to sell their range of product in the competitive market. indicating a more important role for the company's manufacturing base in Bangalore.
To know about the marketing strategies of the competitors of Toyota. it helps the firm acquire a better understanding of the buyer. 2. To face the keen competition. Every market research proves useful to the organization. it also aids the formulation of the marketing mix. the study reveals the fact that may have come up during the project and these facts can either be used a opportunities in exploring and expanding the business as well as can be used as safeguard against threats by competitors to prepare an effective marketing strategy. Marketing research helps the firm in every component of total marketing task. it also helps in taking the information of competitor's strategies and their impact on the buyer. the competition and the marketing environment. To find out the market share of Toyota. product. These are as follows. To discover and translate the needs and desire of customer into products and services so as to create the demand of the product (through planning and producing planned product). To know where Toyota stands as far as the BCG –matrix models concerned. 29 .3 OBJECTIVES OF STUDY The object of report is not only to focus on competitors but also to get the competitive position in the national as well as international market through customer satisfaction.organization. marketing research helps the firm in every component of the total marketing task. To know about the marketing strategies used by Toyota. distribution and pricing needs. To serve the customer through channel of distribution.
place and promotional strategy for the market. 5.retailers and distributors. 30 . price. 3.5 RESEARCH METHODOLOGY This project depends upon the primary as well as secondary sources which are as follows. This study can be applied to find out an effective distribution channel to enhance the sale of various products of Toyota motors.4 SCOPE OF THE STUDY These are some of the scope of the study : 1. From the present study we can know the market share of different products and accordingly formulated strategy to enhance it. 2. 4. Primary Source: Observation Experiment Talking with consumers. 2. The present study can be extended to access the present marketing condition of Indian automobile sector. The result of marketing success can be interpreted to assess the rate of employee satisfaction in various departments.2. The study can be used to design a proper product.
After classifying is represented in the form of tables i.e. 31 .e.Secondary Source: Balance sheet of the company Company website SAMPLE SIZE AND AREAS COVERED A customer-based survey was conducted in which 100 people were asked to fill the questionnaire in which 50 people belong to cities of Delhi and GURGAON. Because it was not possible to consider each and every person of those cities or of villages so. systematically arranged in columns and rows. PROBABILITY SAMPLE or RANDOM SAMPLE was taken. STATISTICAL AND PRESENTATION TOOLS PRIMARY DATA is represented: First classified i. SECONDARY DATA is represented: In the form of tables. Some of the data is also graphically represented in the form of PIE DIAGRAM. By the way of BAR GRAPHS and SUBDIVIDED BAR GRAPHS (Graphical presentation). grouped qualitatively and quantitatively according to the situation or the type of the data which was collected.
32 . Some of them are as follows: Because of illiteracy.6 LIMITATIONS OF THE STUDY Since the road to improvement is never ending. Co- operation on the part of informants. it was a time consuming method in which continuous guidance was required. was difficult to presume. So. It is possible that the information supplied by the informants may be incorrect. in some cases. so this study also suffers from certain limitations.2. Questionnaire method involves some uncertainty of response. the study may lack accuracy.
CONCEPTUAL DISCUSSION MARKETING What is marketing? There are many different definitions of marketing. they all are. Consider some of the following alternative definitions: “The all-embracing function that links the business with customer needs and wants in order to get the right product to the right place at the right time” “The achievement of corporate goals through meeting and exceeding customer needs better than the competition” “The management process that identifies. They all try to embody the essence of marketing: • Marketing is about meeting the needs and wants of customers. anticipates and supplies customer requirements efficiently and profitably” “Marketing may be defined as a set of human activities directed at facilitating and consummating exchanges” Which definition is right? In short. • Marketing is a business-wide function – it is not something that operates alone from 33 .
other business activities. • Marketing is about understanding customers and finding ways to provide products or services which customers demand To help put things into context. you may find it helpful to often refer to the following diagram which summarises the key elements of marketing and their relationships: 34 .
People have basic needs for food. All these factors have to be taken into account as a business tries to match its capabilities with the needs and wants of its target customers. They face threats from competitors. An organisation that adopts the marketing concept accepts the needs of potential customers as the basis for its operations. social and technological environment. esteem and self-development. The marketing concept is about matching a company's capabilities with customer wants. Many of these needs are created from human biology and the nature of social relationships. shelter. This matching process takes place in what is called the marketing environment.2 MARKETING CONCEPT AND ORIENTATION It is a fundamental idea of marketing that organisations survive and prosper through meeting the needs and wants of customers. economic. affection. Whilst customer needs are broad. 35 . customer wants are usually quite narrow. What are customer needs and wants? A need is a basic requirement that an individual wishes to satisfy. therefore. very broad. Customer needs are. and changes in the political. This important perspective is commonly known as the marketing concept. Businesses do not undertake marketing activities alone. Success is dependent on satisfying customer needs.Figure 1.
However.A want is a desire for a specific product or service to satisfy the underlying need. many consumers around the globe want a Mercedes. What they want to eat and in what kind of environment will vary enormously. the media and marketing activities of businesses. It is not McDonalds that makes people hungry. For others a microwaved readymeal meets the need. Businesses do not create customer needs or the social status in which customer needs are influenced. Businesses therefore have not only to make products that consumers want. Consumer wants are shaped by social and cultural forces. This leads onto another important concept . For example. But relatively few are able and willing to buy one. For some. Consider this example: Consumers need to eat when they are hungry. businesses do try to influence demand by designing products and services that are • Attractive • Work well • Are affordable • Are available 36 . Some consumers are never satisfied unless their food comes served with a bottle of fine Chardonnay. but they also have to make them affordable to a sufficient number to create profitable demand.that of customer demand: Consumer demand is a want for a specific product supported by an ability and willingness to pay for it. eating at McDonalds satisfies the need to meet hunger.
which would see wide popularity. took the recipe idea one step further and coined the term 'Marketing-Mix'. One version of the origins of the marketing mix starts in 1948 when James Culliton said that a marketing decision should be a result of something similar to a recipe. E. DEFINITION Although some marketers[who?] have added other Ps. material costs. in his American Marketing Association presidential address. This version continued in 1953 when Neil Borden. Jerome McCarthy. MARKETING MIX The marketing mix is generally accepted as the use and specification of the four Ps describing the strategic position of a product in the marketplace. competition.Businesses also try to communicate the relevant features of their products through advertising and other marketing promotion. Typical examples of a mass produced objects are the motor car and the disposable razor. product identity 37 . proposed a 4 P classification in 1960. the fundamentals of marketing typically identifies the four Ps of the marketing mix as referring to: Product -An object or a service that is mass produced or manufactured on a large scale with a specific volume of units. The four Ps concept is explained in most marketing textbooks and classes. such as personnel and packaging. It is determined by a number of factors including market share. A prominent marketer. A typical example of a mass produced service is the hotel industry. Price – The price is the amount a customer pays for the product. A less obvious but ubiquitous mass produced service is a computer operating system.
from television and cinema commercials.and the customer's perceived value of the product. Public relations are where the communication is not directly paid for and includes press releases. potentially related to a promotional offer. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. Word of mouth is any apparently informal communication about the product by ordinary individuals.99 would be considered a tactical change. Making large changes in any of the four Ps can be considered strategic. Sales staff often plays an important role in word of mouth and Public Relations (see Product above). which is common in film promotion. A certain amount of crossover occurs when promotion uses the four principal elements together. public relations. However a change of $131 to $130. say from $19. a large change in the price. conferences. Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. One of the most notable means of promotion today is the Promotional Product.00 would be considered a strategic change in the position of the product. For example. Broadly defined. This category has grown each year for the past decade while most other forms have suffered. 38 . sponsorship deals. satisfied customers or people specifically engaged to create word of mouth momentum. It can include any physical store as well as virtual stores on the Internet. seminars or trade fairs and events. radio and Internet adverts through print media and billboards.advertising. word of mouth and point of sale. By offering the product with the right combination of the four Ps marketers can improve their results and marketing effectiveness.00 to $39. The business may increase or decrease the price of product if other stores have the same product. exhibitions. It is often referred to as the distribution channel. Promotion has four distinct elements . Advertising covers any communication that is paid for. Making small changes in the marketing mix is typically considered to be a tactical change. Place – Place represents the location where a product can be purchased. as in useful items distributed to targeted audiences with no obligation attached. optimizing the marketing mix is the primary responsibility of marketing.
Product. Process. People. Objectives such as providing solutions for customers at low cost have not generated adequate profit margins. He also claims that pursuing a ROI approach while ignoring marketing objectives is just as problematic. Doyle claims that developing marketing based objectives while ignoring profitability has resulted in the dot-com crash and the Japanese economic collapse.CRITICISMS Peter Doyle claims that the marketing mix approach leads to unprofitable decisions because it is not grounded in financial objectives such as increasing shareholder value. An expanded system based on Seven Ps stresses the importance of Place. He argues that a net present value approach maximizing shareholder value provides a "rational framework" for managing the marketing mix. and Physical evidence 39 . Others claim it has too strong of a product market perspective and is not appropriate for the marketing of services. According to Doyle it has never been clear what criteria to use in determining an optimum marketing mix. Price. Some people claim the four Ps are too strongly oriented towards consumer markets and do not offer an appropriate model for industrial product marketing. Promotion.
the supply and the demand.MARKET RESEARCH Market research is for discovering what people want. Information about the markets can be obtained in several different varieties and formats. or believe. and psychographic differences. It can also involve discovering how they act. MR-Anywhere is a very good platform for market research and analysis For starting up a business there are a few things that are important: Market information Market information is making known the prices of the different commodities in the market. Market trends 40 . Widely used bases for segmenting include geographic differences. personality differences. demographic differences. Examples of market information questions are: Who are the customers? Where are they located and how can they be contacted? What quantity and quality do they want? When is the best time to sell? Market segmentation Market segmentation is the division of the market or population into subgroups with similar motivations. need. use of product differences. Once that research is complete it can be used to determine how to market your specific product.
during a period of time.The upward or downward movements of a market. A few techniques are: Customer analysis Choice Modelling Competitor analysis Risk analysis Product research Advertising research 41 . The market size is more difficult to estimate if you are starting with something completely new. products etc. In this case. [Ilar 1998] But besides information about the target market you also need information about your competitor. your customers. you will have to derive the figures from the number of potential customers or customer segments.
Tata.DATA ANALYSIS 4. etc 42 . Maruti Suzuki.1 PERCENTAGE OF TOYOTA OWNERS OW NERS OF TOYOTA YES 24% NO 76% YES NO Figure 1.3 INFERENCE: 24% of the respondents were owners of Toyota 76% of the respondents were owners of Honda.
43 .4 INFERENCE: 83% of the Respondents were satisfied with their cars and the services of TOYOTA However 17% of the Respondents were dissatisfied at the same time.2 CUSTOMER SATISFACTION RATING CUSTOMER SATISFACTION 17% SATISFIED DISSATISFIED 83% Figure 1.4.
4. 44 .3 PREFERENCES OF BUYING A NEW CAR PREFERENCES OF BUYING A NEW CAR 40 30 20 10 0 TOYOTA HYUNDAI MARUTI HONDA Figure 1.5 INFERENCE: 19% of the respondents would prefer to buy a Toyota car against its competitors. 38% of respondents preferred for Maruti. 19% and 24% respectively preferred for Hyundai & Honda.
and Dealers for providing the information.V. Rest 25% was shared by T.4 WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT TOYOTA INFORMATION ABOUT TOYOTA 12% 20% 55% 13% DEALERS PRINT MEDIA T. INTERNET Figure 1.V.6 INFERENCE: Information through Internet and Print media accounts for more than half or 75% of the information shared with the masses. 45 .4.
7 INFERENCE: 78% of the respondents felt that Toyota has the most fuel efficiency.5 TOYOTA CARS HAS THE MOST FUEL EFFICIENCY F UE L E F F IC IE NC Y O F T O YO T A 100 80 60 40 20 0 78 22 Y ES NO Figure 1. While 22% felt it isn’t the most fuel efficient. 46 .4.
4. 47 . While 8% of respondents thought it was not so good.6 THE FEATURES OF TOYOTA AS COMPARED TO OTHER CARS FEATURES OF TOYOTA 12% 8% GOOD 10% VERY GOOD 70% NOT SO GOOD SATISFACTORY Figure 1. 10% thought it was very good and 12% felt satisfactory about the features.8 INFERENCE: • • 70% of the respondents felt that the features of the Toyota are good.
Then comes Handling and Fuel Efficiency.7 THE QUALITIES THAT BEST DESCRIBES TOYOTA FEATURES THAT BEST DESCRIBES TOYOTA 40 30 20 10 0 HANDLING FUEL EFFICIENCY DESIGN COM FORT 15 18 38 29 Figure 1. 48 .9 INFERENCE: Toyota is best known for its design & comfort.4.
7% said it was satisfactory and 3% felt it was not so good. 16% said it was very good.4.8 HOW DO YOU FIND THE INTERIORS OF TOYOTA INTERIORS OF TOYOTA 3% 16% 7% GOOD VERY GOOD NOT SO GOOD 74% SATISFACTORY Figure 1.10 INFERENCE: • • The interiors of Toyota are very good according to 74% of the respondents. 49 .
9 WHAT SHOULD BE DONE TO IMPROVE TOYOTA ? WHAT SHOULD BE DONE TO IMPROVE TOYOTA 13% 15% 72% MAKE IT MORE AFFORDABLE CHEAPER SPARE PARTS MORE SERVICE STATIONS Figure 1. 50 . a theory which was backed by 72% of the respondents.11 INFERENCE: If Toyota is made more affordable then it would win more customers.4. 15% and 13% respectively want cheaper spare parts and more service stations.
10 WHAT SHOULD BE DONE TO MAKE TOYOTA THE BEST CAR WHAT SHOULD BE DONE TO MAKE TOYOTA THE BEST CAR 15 10 15 60 MAKE IT MORE FUTURISTIC MAKE IT MORE SPORTY GIVE IT A RETRO LOOK GIVE IT A CONCEPT CAR LOOK Figure 1.12 INFERENCE: 51 .4.
To make it the best car in its class it should be made more futuristic which was felt by 60% of the respondents. 15% of the respondents thought it should be made more sporty.13 INFERENCE: 52 . 4.11 ARE YOU HAPPY WITH THE AFTER SALES SERVICES PROVIDED BY TOYOTA HAPPY WITH AFTER SALES SERVICES PROVIDED BY TOYOTA 15% HAPPY UNHAPPY 85% Figure 1. 10% wanted it to have a retro look and 15% wanted to give it a concept car look.
Overall 85% of the respondents were happy with the after sales service provided by Toyota. 53 . 15% were unhappy with Toyota due to poor after sales services provided by them.
V. Then comes Handling and Fuel Efficiency. While 8% of respondents thought it was not so good. 10% thought it was very good and 12% felt satisfactory about the features Toyota is best known for its design & comfort.FINDINGS AND RECOMMENDATIONS 5.15% and 13% respectively want cheaper spare parts and more service stations. a theory which was backed by 72% of the respondents.1 FINDINGS 76% of the respondents were owners of Toyota 83% of the Respondents were satisfied with their cars and the services of TOYOTA. 54 . and Dealers for providing the information 78% of the respondents felt that Toyota has the most fuel efficiency 70% of the respondents felt that the features of the Toyota are good. However 17% of the Respondents were dissatisfied at the same time 18% of the respondents would prefer to buy a Toyota car against its competitors Information through Internet and Print media accounts for more than half or 75% of the information shared with the masses. If Toyota is made more affordable then it would win more customers. Rest 25% was shared by T.
Toyota must plan out an ideal marketing producing capacity . To make it the best car in its class it should be made more futuristic which was felt by 60% of the respondents. Toyota should adopt an offensive marketing strategy for entering in the small car segment. Toyota must at the moment carry out a feasibility study for launching a vehicle in the domestic market where it has models like the Innova and Camry amongst others.2 RECOMMENDATIONS Toyota should adopt the defensive marketing strategy because as being the second largest car producer in the international market. 55 . 5.15% of the respondents thought it should be made more sporty.becaue it faces the problem of over and under capacity in case of upturn and downturn of the market. This market is dominated by Maruti Suzuki and Hyundai in the Indian domestic auto market. Toyota should conduct market survey in Indian market for quails in order to know the perception of Indian consumers.10% wanted it to have a retro look and 15% wanted to give it a concept car look.
000 _________25.ANNEXURE QUESTIONNAIRE FOR CONSUMER A) NAME B) ADDRESS C) CONTACT NUMBER D) INCOME GROUP _________15.000 _________50. 000-50.000-25.000 1.000 _________Above 75. DO YOU OWN A CAR? o YES NO IF YES. HOW SATISFIED ARE YOU WITH THE SERVICES OFFERED BY TOYOTA ? (i)SATISFIED (ii) DISSATISFIED 56 .000-75. THEN WHICH ONE? (i)TOYOTA (ii) HYUNDAI (iii) MARUTI 2.
DO YOU THINK TOYOTA HAS THE MOST FUEL EFFICIENCY (i)YES (ii) NO 7.3. (ii) PRINT MEDIA (iv)INTERNET 6.V. IF SATISFIED. THEN ARE YOU HAPPY WITH THEIR CHARGES AND TIMELY DELIVERY THEY WERE OFFERING? (i)HAPPY (ii) UNHAPPY 4. IF GIVEN A CHOICE TO CHOOSE A CAR COMPANY. HOW DO YOU FIND THE FEATURES OF TOYOTA AS COMPARED TO OTHER CARS? (i)GOOD (iii)NOT SO GOOD (ii) VERY GOOD (iv) SATISFACTORY 57 . WHICH COMPANY WOULD YOU CHOOSE? (i) TOYOTA (ii) MARUTI (iii) HYUNDAI 5. WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT TOYOTA ? (i)DEALERS (iii)T.
8. WHICH OF THESE QUALITIES DO YOU THINK BEST DESCRIBES TOYOTA ? (i)HANDLING (iii)DESIGN (ii) FUEL EFFICIENCY (iv)COMFORT 9. ACCORDING TO YOU WHAT SHOULD BE DONE TO MAKE TOYOTA THE BEST CAR? (i)MAKE IT MORE FUTURISTIC (ii)MAKE IT MORE SPORTY 58 . HOW DO YOU FIND THE INTERIORS OF TOYOTA ? (i)GOOD (iii)SATISFACTORY (ii) VERY GOOD (iv) NOT SO GOOD 10. ACCORDING TO YOU WHAT SHOULD BE DONE TO TOYOTA ? (i) MAKE IT MORE AFFORDABLE (ii) CHEAPER SPARE PARTS (iii)MORE SERVICE STATIONS IMPROVE 11.
com www.N.google.toyota ..(iii)GIVE IT A RETRO LOOK (iv)GIVE IT A CONCEPT CAR LOOK 12. Gupta.com 59 .B. Marketing management 2005 C. Marketing management 2006 Magazines Business standard Motoring May 2008 edition Internet: www. ARE YOU HAPPY WITH THE AFTER SALES SERVICES PROVIDED BY TOYOTA ? (i)YES (ii) NO (iii) HAPPY BUT IT CAN BE BETTER BIBLIOGRAPHY Books: Kotler Philips. Marketing Management: 30th Edition Chabra T.
domain-b.com 60 .yahoo.wikipedia.com www.www.com www.