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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.
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 .Top Ten Players in Indian Automobile Sector The domestic players as well as the foreign players dominate the Indian automobile sector. The key players contributing to the growth of the sector are discussed below.
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. which was used in the first Model A1 passenger car in May 1935 and the G1 truck in August 1935. the company name was changed to: Signify the separation of the founders' work life from home life. Kiichiro Toyota. the division produced its first Type A Engine in 1934. was established as an independent company in 1937. Production of the Model AA passenger car started in 1936. 5 . Although the founding family name is Toyoda. and Give the company an auspicious beginning. where eight is regarded as a lucky number. Soon thereafter.1. Toyota Motor Co. and electric sewing machines which are available worldwide. Although the Toyota Group is most well known today for its cars.2. it is still in the textile business and still makes automatic looms (fully computerized. Simplify the pronunciation. Toyota is considered luckier than Toyoda in Japan. of course). and eight is the number of strokes it takes to write Toyota in Katakana.
In April 1956 the Toyota dealer chain was established.During the Pacific War the company was dedicated to truck production for the Imperial Army. Replica of the Toyota Model AA. Commercial passenger car production started in 1947 with the model SA. the first production model of Toyota in 1936 6 . For example. military trucks were kept as simple as possible. Because of severe shortages in Japan. In 1950 a separate sales company Toyota Motor Sales Co. the trucks had only one headlight on the center of the hood. was established (which lasted until July 1982).
South Africa. the United Kingdom. Indonesia. including its most popular model. 7 . Toyota also builds and sells cars in China in a joint venture with Tianjin Xiali. when it switched to importing cars from Japan and Australia. Argentina and Czech Republic. Toyota has manufacturing or assembly plants in the United States.ORGANISTION STUCTURE OF THE COMPANY HEADQUARTERS: TOYOTA CITY. JAPAN ASSEMBLY PLANTS OVER THE WORLD Toyota has factories all over the world. Turkey. manufacturing or assembling vehicles for local markets. Toyota New Zealand assembled vehicles until 1998. Australia. Poland. Canada. Cars from these plants are often exported to other countries. and more recently India. the Corolla. Brazil. France.
Toyota Car Model: Innova Camry Avalon Matrix Corolla 8 .
Prius TRUCKS: Tacoma Tundra SPORTS UTILITY VEHICLES( SUVs): 4runner 9 .
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. and the new global Camry went on sale. Inc. In manufacturing. Toyota Motor Kyushu. the Kentucky plant. emphasizing the importance of this best-selling car. increased its manufacturing capacity. Toyota established the North American Production Center in the U.Land cruiser OVERVIEW In 2006. Lexus launched its new flagship model. a key vehicle in Toyota’s North American lineup. 10 . The centers educate trainers for local manufacturing plants in all regions. the Texas plant began producing the new Tundra truck. following the establishment of the Asia Pacific Global Production Center in Thailand in August 2005. In human resources development. the LS. On the product front. and the European Global Production Center in the United Kingdom in March. while Toyota Motor Tohoku Co.S. began full-scale operations at its engine factory. In November. In Japan. Ltd. manufacture of the Camry began in Guangzhou. In May. China. started manufacturing the first Toyota hybrid vehicle to be made in North America. a new Corolla range was introduced. with trainees passing on what they learn to team members on their return to their plants.. Toyota was engaged in a variety of projects designed to solidify its foundations while continuing to grow. In Japan. Established as branches of the Global Production Center in Japan. while in the United States. the Camry Hybrid. several new projects were started around the world. in February. which in October celebrated 20 years of production.
In addition. Work with business partners in research and creation to achieve stable. Toyota will continue to promote efforts to develop environmentally friendly technology and vehicles. safety and energy.In R&D. 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. as part of Toyota’s efforts to respond to the diversification of energy. while honoring mutual trust and respect between labor and management. at the right time. Dedicate ourselves to providing clean and safe products and to enhancing the quality of life everywhere through all our activities. It made a special effort in the area of the environment by expanding its lineup of hybrid vehicles. regardless of position.” and in accordance with the infrastructure and customer needs of each region. Toyota focused its efforts on three key areas: environment. in the right place. Respect the culture and customs of every nation and contribute to economic and social development through corporate activities in the communities. and has worked on R&D relating to plug-in hybrid. while keeping ourselves open to new partnerships. Create and develop advanced technologies and provide outstanding products and services that fulfill the needs of customers worldwide. 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. long-term growth and mutual benefits. From this point on. 11 . based on the philosophy of providing “the right car. PERCEPTS Be contributive to the development and welfare of the country by working together. Pursue growth in harmony with the global community through innovative management. Foster a corporate culture that enhances individual creativity and teamwork value.
Be practical and avoid frivolity. strive to create a warm. Member of the Board 1) Domestic Sales Operations Group and Overseas Planning Operations Group 12 . Be kind and generous. homelike atmosphere. Be at the vanguard of the times through endless creativity. Be reverent. inquisitiveness and pursuit of improvement. **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. 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.
and to implement the "most-suitable growth strategy from a global perspective" though product. (transfer) • Tokyo Secretarial Div. have been integrated. • Tokyo General Administration Div. domestic and overseas. i. to allow close coordination between TMC and various regions. After Changes • Government & Public Affairs Group • Public Affairs Administration Dept. including Japan. Sales and planning functions. (transfer) 13 . • Tokyo Secretarial Div. 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. Purpose As a global business management function of Toyota's global headquarters.The Domestic Sales Operations Group and the Overseas Planning Operations Group have been reorganized. which were divided by region.e. (transfer) • Tokyo General Administration Div.
Oceania & Middle East Operations Group. Asia.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. Before Changes • Divisions/departments not belonging to a Group • Taiwan Office • China Office After Changes • Asia. Oceania & Middle East Operations Group • Taiwan Office (transfer) • China Office (transfer) 14 . 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.
We must be a company where people think seriously about the role and responsibility of their company in the world. the value of its potential fuel savings could prove greater than its cost premium over conventional vehicles. It is twice as fuel-efficient as conventionally powered vehicles of comparable size and performance. as we globalize our operations. 15 . Another way to align our interests with the larger interests of the community is through technology. it actually could save money for car owners. Our hybrid-electric car will have a gasoline engine to generate electricity or provide supplementary power to the wheels. for example. Equally important. So. the number of divisions has increased from 228 to 229. as well as improving vehicular safety. Photos and text on the following pages introduce some of the technologies we are developing to position Toyota as an environmental leader.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. Survival and growth in our industry will hinge on developing technologies for reducing environmental impact of our products and operations. That is when we will put a hybrid-electric passenger car onto the market in Japan. Our economic and industrial contribution in each region grows. By the end of 1997. GROWTH Lasting growth for Toyota will depend on aligning our interests with the larger interests of customers and the community. we will introduce the world's first new-energy transport that is commercially competitive with conventional automobiles.
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. "zero emission" vehicles that alleviate urban pollution Fuel-cell systems that could transform the automobile in the 21st century. in early November and it was less than one share point behind General Motors Corp. Toyota.. A direct-injection system that makes gasoline engines more efficient Hybrid-electric systems that double fuel efficiency and reduce noxious emissions Pure electric.S. retail market share a year earlier.S. MARKET SHARE OF TOYOTA Toyota Motor Corp. retail market share than Ford Motor Co.. Those technologies include. Japan's largest automaker. had a 15.4 percent U. Toyota plans to enter small car segment in India 16 .. We have introduced or demonstrated new power train technologies in the past year that will make Toyotas run cleaner and greener than ever. grabbed more U.
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.
Vikram Kirloskar said as much when he commented.'' 20 . The small car will not compete with the upcoming Nano of Tata Motors. will have an installed capacity of 100.000 units annually and will employ about 2. Tata Motors and Bajaj Auto can rest easy for the time being. The factory will be ready by mid-2010 and we are yet to finalize the launch date of the new car. touted to be the world's cheapest car. The arrangement of this additional amount required for the plant would be worked out later.400 people. However. the initial design features indicate that it can be exported to other markets in Asia. Top officials confirmed that the company will soon be introducing its newly designed compact car in the Indian market. Daihatsu. But this initial investment won't include certain other costs like installing robots and other automation equipment. Though the new compact car has been designed for the Indian market. indications are that it maybe priced higher than its Indian competitors. will not be involved in designing the compact new car. We plan to have petrol as well as diesel versions. The model is yet to be finalized. to be commissioned by 2010.The modular plant. A new test track will be included in the second plant. Toyota's group company. We have basic concept of the new car ready and very shortly we will finalize the design of the car. ''We are working on the new design.'' The plant which is being set up will see an initial investment of Rs1400 crore. which is expected to be spread over 130 acres of land. Although Okabe confirmed that the new product will be the cheapest in the Toyota stable. though it may be included in future plans.
1 The generic strategies are: 21 . or does it focus on a very narrow. or are they the lowest cost producer in an industry? Competitive scope of the market .GENERIC STRATEGIES Generic strategies were used initially in the early 1980s.does the company target a wide market. 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. niche market? Figure 1.are the products differentiated in any way. and seem to be even more popular today.
' However. are very good not only at producing high quality autos at a low price. Focus. There is also the chance that any differentiation could be copied by competitors. Toyota differentiates its product and service. Cost leadership 2. such as Toyota. 'cost advantage' is the focus. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments. but have the brand and marketing skills to use a premium pricing policy. Differentiation Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. Producers could price at competitive parity. Costs are shaved off every element of the value chain. These costs must be offset by the increase in revenue generated by sales.1. The differentiating organization will incur additional costs in creating their competitive advantage. Factories are built and maintained. exploiting the benefits of a bigger margin than competitors. Focus or Niche Strategy 22 . 3. generating a higher than average price. Products tend to be 'no frills. Some organization. For example. Therefore there is always an incentive to innovated and continuously improve. 1. low cost does not always lead to low price. Differentiation 3. 2. Cost Leadership The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest cost. Costs must be recovered. This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. labor is recruited and trained to deliver the lowest possible costs of production.
59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range. from the small Yaris to large trucks. specialist niches could disappear in the long term. With a cost focus a firm aims at being the lowest cost producer in that niche or segment. This is an example of very focused segmentation. £5.3% higher at 18. highly targeted marketing and a commitment to lean manufacturing and quality. The company uses marketing techniques to identify and satisfy 23 . while sales were 7. telecommunications.8% to 1. Cost focus is unachievable with an industry depending upon economies of scale e. Where an organization can afford neither a wide scope cost leadership nor a wide scope differentiation strategy. against the worldwide motor industry trend. targeting and positioning in a number of countries. Commentators argue that this is because the company has the right mix of products for the markets that it serves. A company could use either a cost focus or a differentiation focus. There are potentially problems with the niche approach. The company is still behind rivals General Motors with 8.17 trillion yen ($11bn. 1.T ANALYSIS Strengths New investment by Toyota in factories in the US and China saw 2005 profits rise. In 2003 Toyota knocked its rivals Ford into third spot. Competitive advantage is generated specifically for the niche.W.4 S. defined segment of a market.55 trillion yen.85bn). With a differentiation focus a firm creates competitive advantage through differentiation within the niche or segment. Here an organization focuses effort and resources on a narrow.O. A niche strategy is often used by smaller firms. Net profits rose 0.g.The focus strategy is also known as a 'niche' strategy. Small. to become the World's second largest carmaker with 6. a niche strategy could be more suitable.78 million units. The company makes a large range of vehicles for both private customers and commercial organisations.
and Toyota has it Prius. Total Quality Management). WEAKNESS Being big has its own problems. for example Ford has bought into the technology for its new Explorer 24 . Toyota markets most of its products in the US and in Japan. The company needs to keep producing cars in order to retain its operational efficiency. Both are based upon advance technologies developed by the organization.customer needs. it takes time to accommodate. Lexus has RX 400h hybrid. Its brand is a household name. 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. Perhaps that is why the company is beginning to shift its attentions to the emerging Chinese market. then the company may miss out on potential sales due to under capacity i. the company could see over capapacity.e. OPPURTUNITIES Lexus and Toyota now have a reputation for manufacturing environmentally friendly vehicles. This is a typical problem with high volume car manufacturing. Therefore it is exposed to fluctuating economic and political conditions those markets. So if the car market experiences a down turn. as well as the high costs of training and retaining labour. Movements in exchange rates could see the already narrow margins in the car market being reduced. The company also maximizes profit through efficient manufacturing approaches (e.g. Rocketing oil prices have seen sales of the new hybrid vehicles increase. Car plants represent a huge investment in expensive fixed costs. If on the other hand the car market experiences an upturn. Toyota has also sold on its technology to other motor manufacturers.
Toyota faces tremendous competitive rivalry in the car market. 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. South Korea and new plants in Eastern Europe. the car was criticized for its diminutive size. while the rest were sold in Japan. The vehicle itself is a unique convertible. steel and fuel. The company is also exposed to any movement in the price of raw materials such as rubber.5bhp at an affordable price of Rs. In 2005 the company had to recall 880. with models extending at their rear! The narrow segment is notorious for it narrow margins and difficulties for branding. 65. THREATS Product recalls are always a problem for vehicle manufacturers.00 sports utility vehicles and pick up trucks due to faulty front suspension systems. the M800.5 COMPETITVE S. Europe and Australia. Toyota did not give details of how much the recall would cost. MUL rolled out its first car. Toyota is to target the 'urban youth' market. 1. Initially. The majority of affected vehicles were sold in the US. but it proved to be spacious enough to carry four adults. The first vehicle was released for sale in December 1983. Better 25 . The company has launched its new Aygo. Such moves can only firm up Toyota's interest and investment in hybrid R&D. Competition is increasing almost daily.SUV Hybrid.T ANALYSIS STRENGTH In an era when owning a car was a distant dream for a vast majority of Indians. As with any car manufacturer.O. with new entrants coming into the market from China.W. The company labeled it a people's car.000. with a 796cc 3cylinder engine that delivered 39.
February and March respectively. Alto took over M800's position as the largest selling car with sale of 10. 26 . 8. is the lack of product design capability.000 followed by the launch of the non-AC Alto for Rs.324 and 9. another MUL product.011 units in January. In the coming years.373 units.540 in March. they should focus on acquiring product design and lean production knowhow (as the Korean firms did in the eighties and early nineties. 13.301 units in January.016 units. selling 15.350 units and in May 2004.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. M800 performed well. Alto For the first few months of 2004. 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.399 units. 0. Analysts felt that Alto had taken the top spot because of its price reduction in September 2003 by Rs. Also the Research and developments headquarters for engine development of Maruti Suzuki are in Japan which is a major weak point.23 mn in the first week of April 2004. In April. 23. slightly over M800's sales of 10. Maruti Suzuki also needs to invest in capacity and research and development in India to stay abreast of competition. began eating into M800's share. Alto reported sales of 8. its sales increased to 9.518 units in February and 15. But gradually Alto.
. the Indian market would touch annual sales of 1. Executive Vice-President. With a change of guard at Toyota Kirloskar Motor Ltd.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." Yoshio Ishizaka. the Toyota Quails notched sales of 25.8 million units overseas. Innova has successfully become a category creator. Last year. Toyota sold 3. Their dealers have also worked hard to provide their high levels of customer support. Toyota has taken many initiatives. said. In this 27 . According to analysts. Toyota's strategy to corner a significant chunk of the Indian market involves "superior product offering and dedicated technology". "Competition is intense in the Indian market for domestic and foreign companies. he said. In India. Atsushi Toyoshima has been appointed Managing Director of the company.OBJECTIVE AND METHODOLOGY 2. replacing Sachio Yamazaki.2 million units by 2005. manufacturing six million vehicles at 56 plants in 25 countries." "In the last one year. the company has evolved a new strategy to capture 15 per cent market share in the Indian automotive segment. Toyota Motor Corporation. Effective from January 1. which has made Innova the most successful product. The Indian market is important for Toyota with potential to aid its growth strategy. We will continue to meet the ever-challenging customer expectations and will come out with innovative marketing strategies.000 units since its launch last year.
the decision to introduce Innova here (India) was based on three factors. First. sales schemes and what impact does it has on the dealers and consumers. the C.context. so that they can maintain a viable fit between the organizational objectives. The very essence of every project related to marketing is providing a view to management for chalk out the organization. every market research provides useful suggestions to the 28 . 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. Toyoshima said According to the managing director of Toyota Kirloskar Motor. skills and resources and its changing market opportunities. including auto components.segment (between Rs 5 lakh to Rs 10 lakh) of the car market has grown by 20 per cent every year. there is a latent desire of customers.2 MANAGERIAL USEFULLNESS The marketing department can use this study to enhance their marketing strategies for better sales. "Bangalore is an ideal location to meet all of Toyota's needs." Mr. it provides feedback to the organization about their sales. The multi utility vehicle segment has also grown at doubledigit levels. Second. 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. to seek attributes like greater interior space and overloading ability. indicating a more important role for the company's manufacturing base in Bangalore. including those owning MPVs. Innova brings together the space and fuel economy of an MPV with the style. while passenger car buyers look for better styling and improved riding comfort. agility and power of a sedan. with an improving lifestyle and better roads. the change of leadership in Toyota's Indian division is important. Atsushi Toyoshima. over the last five years. Third. Toyota Kirloskar Motor has described it as the first three-row seating passenger car in the Indian market 2.
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. 29 . 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. To know where Toyota stands as far as the BCG –matrix models concerned. marketing research helps the firm in every component of the total marketing task. it also aids the formulation of the marketing mix. 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 face the keen competition. These are as follows. the competition and the marketing environment. it helps the firm acquire a better understanding of the buyer. 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. 2. product. To know about the marketing strategies of the competitors of Toyota. To serve the customer through channel of distribution. To find out the market share of Toyota. Every market research proves useful to the organization. To know about the marketing strategies used by Toyota. distribution and pricing needs.
2. place and promotional strategy for the market. The study can be used to design a proper product. The result of marketing success can be interpreted to assess the rate of employee satisfaction in various departments. 3. From the present study we can know the market share of different products and accordingly formulated strategy to enhance it. Primary Source: Observation Experiment Talking with consumers. 4. This study can be applied to find out an effective distribution channel to enhance the sale of various products of Toyota motors. 5.retailers and distributors.4 SCOPE OF THE STUDY These are some of the scope of the study : 1. The present study can be extended to access the present marketing condition of Indian automobile sector.5 RESEARCH METHODOLOGY This project depends upon the primary as well as secondary sources which are as follows. 30 . price. 2.2.
PROBABILITY SAMPLE or RANDOM SAMPLE was taken.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. 31 . grouped qualitatively and quantitatively according to the situation or the type of the data which was collected. After classifying is represented in the form of tables i. By the way of BAR GRAPHS and SUBDIVIDED BAR GRAPHS (Graphical presentation). SECONDARY DATA is represented: In the form of tables. STATISTICAL AND PRESENTATION TOOLS PRIMARY DATA is represented: First classified i. systematically arranged in columns and rows.e. Because it was not possible to consider each and every person of those cities or of villages so. Some of the data is also graphically represented in the form of PIE DIAGRAM.
was difficult to presume. the study may lack accuracy.2. Questionnaire method involves some uncertainty of response. in some cases. so this study also suffers from certain limitations. It is possible that the information supplied by the informants may be incorrect. it was a time consuming method in which continuous guidance was required. 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. So.
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.CONCEPTUAL DISCUSSION MARKETING What is marketing? There are many different definitions of marketing. 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 are. They all try to embody the essence of marketing: • Marketing is about meeting the needs and wants of customers. • Marketing is a business-wide function – it is not something that operates alone from 33 .
• 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 .other business activities.
They face threats from competitors. social and technological environment. Whilst customer needs are broad. very broad. 35 . This matching process takes place in what is called the marketing environment. customer wants are usually quite narrow. Many of these needs are created from human biology and the nature of social relationships. and changes in the political. shelter. affection. 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. An organisation that adopts the marketing concept accepts the needs of potential customers as the basis for its operations. economic. This important perspective is commonly known as the marketing concept. therefore. Businesses do not undertake marketing activities alone. People have basic needs for food.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. Success is dependent on satisfying customer needs.Figure 1. What are customer needs and wants? A need is a basic requirement that an individual wishes to satisfy. Customer needs are. The marketing concept is about matching a company's capabilities with customer wants. esteem and self-development.
For some.A want is a desire for a specific product or service to satisfy the underlying need. but they also have to make them affordable to a sufficient number to create profitable demand. This leads onto another important concept . Businesses do not create customer needs or the social status in which customer needs are influenced. It is not McDonalds that makes people hungry. eating at McDonalds satisfies the need to meet hunger. Consider this example: Consumers need to eat when they are hungry. But relatively few are able and willing to buy one. Businesses therefore have not only to make products that consumers want. However. the media and marketing activities of businesses. businesses do try to influence demand by designing products and services that are • Attractive • Work well • Are affordable • Are available 36 . For example. For others a microwaved readymeal meets the need. Consumer wants are shaped by social and cultural forces. What they want to eat and in what kind of environment will vary enormously. Some consumers are never satisfied unless their food comes served with a bottle of fine Chardonnay. many consumers around the globe want a Mercedes.that of customer demand: Consumer demand is a want for a specific product supported by an ability and willingness to pay for it.
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. such as personnel and packaging. E. Price – The price is the amount a customer pays for the product.Businesses also try to communicate the relevant features of their products through advertising and other marketing promotion. took the recipe idea one step further and coined the term 'Marketing-Mix'. Jerome McCarthy. This version continued in 1953 when Neil Borden. A prominent marketer. proposed a 4 P classification in 1960. A less obvious but ubiquitous mass produced service is a computer operating system. 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. product identity 37 . It is determined by a number of factors including market share. in his American Marketing Association presidential address. DEFINITION Although some marketers[who?] have added other Ps. A typical example of a mass produced service is the hotel industry. competition. Typical examples of a mass produced objects are the motor car and the disposable razor. which would see wide popularity. 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. material costs.
Public relations are where the communication is not directly paid for and includes press releases. public relations. exhibitions. as in useful items distributed to targeted audiences with no obligation attached. sponsorship deals. Making small changes in the marketing mix is typically considered to be a tactical change. word of mouth and point of sale. It is often referred to as the distribution channel. 38 . potentially related to a promotional offer. Advertising covers any communication that is paid for. Making large changes in any of the four Ps can be considered strategic.99 would be considered a tactical change. It can include any physical store as well as virtual stores on the Internet. Sales staff often plays an important role in word of mouth and Public Relations (see Product above). This category has grown each year for the past decade while most other forms have suffered. A certain amount of crossover occurs when promotion uses the four principal elements together.and the customer's perceived value of the product. which is common in film promotion.advertising. Promotion has four distinct elements . Broadly defined. radio and Internet adverts through print media and billboards.00 would be considered a strategic change in the position of the product. optimizing the marketing mix is the primary responsibility of marketing. from television and cinema commercials. say from $19. Word of mouth is any apparently informal communication about the product by ordinary individuals. Place – Place represents the location where a product can be purchased. However a change of $131 to $130.00 to $39. One of the most notable means of promotion today is the Promotional Product. By offering the product with the right combination of the four Ps marketers can improve their results and marketing effectiveness. The business may increase or decrease the price of product if other stores have the same product. Promotion – Promotion represents all of the communications that a marketer may use in the marketplace. satisfied customers or people specifically engaged to create word of mouth momentum. seminars or trade fairs and events. It is the only form of advertising that targets all five senses and has the recipient thanking the giver. conferences. a large change in the price. For example.
Some people claim the four Ps are too strongly oriented towards consumer markets and do not offer an appropriate model for industrial product marketing. People. An expanded system based on Seven Ps stresses the importance of Place. Product. 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. Objectives such as providing solutions for customers at low cost have not generated adequate profit margins. Promotion. Price. Process.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. and Physical evidence 39 . According to Doyle it has never been clear what criteria to use in determining an optimum marketing mix. He argues that a net present value approach maximizing shareholder value provides a "rational framework" for managing the marketing mix. Others claim it has too strong of a product market perspective and is not appropriate for the marketing of services.
Widely used bases for segmenting include geographic differences. personality differences. need. It can also involve discovering how they act.MARKET RESEARCH Market research is for discovering what people want. the supply and the demand. and psychographic differences. use of product differences. Once that research is complete it can be used to determine how to market your specific product. Market trends 40 . Information about the markets can be obtained in several different varieties and formats. 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. demographic differences. 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. or believe.
[Ilar 1998] But besides information about the target market you also need information about your competitor. In this case. The market size is more difficult to estimate if you are starting with something completely new. you will have to derive the figures from the number of potential customers or customer segments. your customers.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 . products etc. during a period of time.
Tata.1 PERCENTAGE OF TOYOTA OWNERS OW NERS OF TOYOTA YES 24% NO 76% YES NO Figure 1. etc 42 .DATA ANALYSIS 4.3 INFERENCE: 24% of the respondents were owners of Toyota 76% of the respondents were owners of Honda. Maruti Suzuki.
4.4 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. 43 .
38% of respondents preferred for Maruti.4.3 PREFERENCES OF BUYING A NEW CAR PREFERENCES OF BUYING A NEW CAR 40 30 20 10 0 TOYOTA HYUNDAI MARUTI HONDA Figure 1. 44 .5 INFERENCE: 19% of the respondents would prefer to buy a Toyota car against its competitors. 19% and 24% respectively preferred for Hyundai & Honda.
INTERNET Figure 1.V.4. 45 .V. Rest 25% was shared by T. and Dealers for providing the information.6 INFERENCE: Information through Internet and Print media accounts for more than half or 75% of the information shared with the masses.4 WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT TOYOTA INFORMATION ABOUT TOYOTA 12% 20% 55% 13% DEALERS PRINT MEDIA T.
7 INFERENCE: 78% of the respondents felt that Toyota has the most fuel efficiency.4. 46 .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.
47 .4.6 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. While 8% of respondents thought it was not so good.8 INFERENCE: • • 70% of the respondents felt that the features of the Toyota are good.
48 .9 INFERENCE: Toyota is best known for its design & comfort.4. 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.
4.10 INFERENCE: • • The interiors of Toyota are very good according to 74% of the respondents. 7% said it was satisfactory and 3% felt it was not so good. 49 .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. 16% said it was very good.
50 . 15% and 13% respectively want cheaper spare parts and more service stations. a theory which was backed by 72% of the respondents.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 1.11 INFERENCE: If Toyota is made more affordable then it would win more customers.4.
4.10 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 .
13 INFERENCE: 52 . To make it the best car in its class it should be made more futuristic which was felt by 60% of the respondents.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. 4. 10% wanted it to have a retro look and 15% wanted to give it a concept car look. 15% of the respondents thought it should be made more sporty.
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.
a theory which was backed by 72% of the respondents. 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. Then comes Handling and Fuel Efficiency.V. 10% thought it was very good and 12% felt satisfactory about the features Toyota is best known for its design & comfort. If Toyota is made more affordable then it would win more customers.1 FINDINGS 76% of the respondents were owners of Toyota 83% of the Respondents were satisfied with their cars and the services of TOYOTA.FINDINGS AND RECOMMENDATIONS 5. While 8% of respondents thought it was not so good. 54 .15% and 13% respectively want cheaper spare parts and more service stations. Rest 25% was shared by T. 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.
5. 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. This market is dominated by Maruti Suzuki and Hyundai in the Indian domestic auto market.2 RECOMMENDATIONS Toyota should adopt the defensive marketing strategy because as being the second largest car producer in the international market. Toyota must plan out an ideal marketing producing capacity .10% wanted it to have a retro look and 15% wanted to give it a concept car look.becaue it faces the problem of over and under capacity in case of upturn and downturn of the market. Toyota should conduct market survey in Indian market for quails in order to know the perception of Indian consumers. 55 .15% of the respondents thought it should be made more sporty. Toyota should adopt an offensive marketing strategy for entering in the small car segment. To make it the best car in its class it should be made more futuristic which was felt by 60% of the respondents.
000-75. THEN WHICH ONE? (i)TOYOTA (ii) HYUNDAI (iii) MARUTI 2. 000-50.000 _________25.000 1. DO YOU OWN A CAR? o YES NO IF YES.000-25.000 _________50.ANNEXURE QUESTIONNAIRE FOR CONSUMER A) NAME B) ADDRESS C) CONTACT NUMBER D) INCOME GROUP _________15.000 _________Above 75. HOW SATISFIED ARE YOU WITH THE SERVICES OFFERED BY TOYOTA ? (i)SATISFIED (ii) DISSATISFIED 56 .
IF SATISFIED. IF GIVEN A CHOICE TO CHOOSE A CAR COMPANY. (ii) PRINT MEDIA (iv)INTERNET 6.3. WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT TOYOTA ? (i)DEALERS (iii)T. THEN ARE YOU HAPPY WITH THEIR CHARGES AND TIMELY DELIVERY THEY WERE OFFERING? (i)HAPPY (ii) UNHAPPY 4. 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 . DO YOU THINK TOYOTA HAS THE MOST FUEL EFFICIENCY (i)YES (ii) NO 7. WHICH COMPANY WOULD YOU CHOOSE? (i) TOYOTA (ii) MARUTI (iii) HYUNDAI 5.V.
WHICH OF THESE QUALITIES DO YOU THINK BEST DESCRIBES TOYOTA ? (i)HANDLING (iii)DESIGN (ii) FUEL EFFICIENCY (iv)COMFORT 9.8. ACCORDING TO YOU WHAT SHOULD BE DONE TO MAKE TOYOTA THE BEST CAR? (i)MAKE IT MORE FUTURISTIC (ii)MAKE IT MORE SPORTY 58 . ACCORDING TO YOU WHAT SHOULD BE DONE TO TOYOTA ? (i) MAKE IT MORE AFFORDABLE (ii) CHEAPER SPARE PARTS (iii)MORE SERVICE STATIONS IMPROVE 11. HOW DO YOU FIND THE INTERIORS OF TOYOTA ? (i)GOOD (iii)SATISFACTORY (ii) VERY GOOD (iv) NOT SO GOOD 10.
(iii)GIVE IT A RETRO LOOK (iv)GIVE IT A CONCEPT CAR LOOK 12.com 59 . Gupta.com www.. Marketing management 2005 C.google. Marketing management 2006 Magazines Business standard Motoring May 2008 edition Internet: www.B. Marketing Management: 30th Edition Chabra T.toyota . 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.N.
www.domain-b.com 60 .com www.wikipedia.com www.yahoo.
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