Technology Adoption And Market Segmentation:

Market segmentation and strategy for high technology products follows a typical pattern called
the “Technology Adoption Life Cycle”. When new technologies are introduced, a typical
marketing strategy focuses on attracting the “Innovators” and subsequently the “Early Adopters”

Innovators are defined as those who pursue products with new technology aggressively, consider
technology to be a central interest in their life, and buy because they enjoy exploring the new
technology features of a product.
They represent a small segment of the total market (approximately 2.5%) but they are critical to
accelerating adoption in later stages. They validate a new product’s functionality and bear the
burden of testing for other market segments.
Often the Early Adopter segment, an estimated 13.5% of the market, is pursued in conjunction
with the Innovators. Early adopters, perceived as ‘visionaries’ in the market, buy into new
products early in the life cycle, are imaginative thinkers who find it easy to envision and use new
technology, rely on their own intuition in purchasing, as opposed to depending on references
from others, and are more tolerant of bugs or glitches in new products than the average
consumer.
A member of the Early Majority is considered to be highly practical and watches and waits for
proven technology. As a pragmatist, this consumer is disinterested in fads, as they want
technological evolution to enhance existing technology. It is estimated that 34% of the total
market for a given product falls in to the Early Majority segment.
Following them is the Late Majority, 34% of the potential buyers. Laggards are at the tail end of
this distribution. Little attention is paid to this segment by marketers due to its refusal to adopt or
understand new technologies.

CASE STUDY: TOYOTA PRIUS

Toyota’s initial marketing strategy for the Prius targeted innovators and early adopters of new
technologies.
Toyota has managed to strategically market its products to its target market better than the big
three in US, in this case the Toyota Prius. Toyota`s hybrid market has been segmented according
to the buyers behavior, in this case, buyers who are pro environmentalists. The car has been
readily accepted in consumer minds and most consumers see the car as an environmentally
friendly and efficient car.
The 2000 “Prius/genius” campaign focused on highlighting Toyota’s commitment to creating
environmentally responsible vehicles and on using online space to engage technophiles early on
in the production process. Toyota enabled interested customers to visit a special website about
Prius development as early as two years before the introduction of the product. Toyota used
focus groups and clinics with target consumers to evaluate different aspects of the Prius. Toyota
found that the consumers valued high technology, affordable price, clean operation, comfort,
Quality, convenient design, and safety.
Toyota has used the penetration pricing strategy instead of the skim pricing strategy because the
demand for hybrid carsis elastic, and the quantity of cars bought will increase as prices decline
plus the car itself will gain mass appeal faster. With Toyota`s strong balance sheet, Toyota is
also able to compete with other car makers by offering competitive financing and lease rates
throughout all its 1200 distributors in the United States alone. Currently Toyota controls about
16 % of the market share in the United States and has five major assembly plants in the United
States which support its distribution place network.
Toyota’s television and print ads underscored the evolutionary aspects of hybrid technology and
freedom from dependence on oil. Toyota created online e-brochures with a 17-second video clip
that were sent to the almost 44,000 people. In addition, Toyota benefited from various celebrity
endorsements that attracted attention to the new Prius. As a ‘purchase accelerator’ among its
target buyers who requested information on the Prius, Toyota offered these customers the
opportunity to preorder cars, which were then finalized by the dealerships. Before the car was
even delivered to dealerships in August of 2000, 1,800 units were sold.

A significant portion of the initial advertising budget for the Prius went to materials to help
dealers communicate the new hybrid technology to customers. Toyota also coordinated with
approximately 900 dealers to execute a ‘rental’ program, which allowed interested customers to
have the car for a one-day, extended test drive. The first generation Toyota Prius experienced
great success in the U.S., with sales growing 32% from 2001 to 2003.

Second-generation Prius

The second-generation of the Prius was introduced in 2004, targeting the ‘early majority’ of
consumers who tend to demand reliable, affordable, proven products, as contrasted to the “early
adopters” targeted in the 2000 campaign. Toyota responded to the American demand for larger
vehicles by introducing a roomier ‘mid-size’ Prius, which could be sold at the same price as the
first generation car due to efficiencies achieved in the production process. Toyota used its
television advertising primarily to tout the size and power, along with the environmental
benefits, of the second generation Prius to convince the early majority that it was a performance
car that happened to be environmentally friendly.
Toyota has masterfully redesigned, the Prius making it more stylish than its predecessors. They
have even added optional accessories that are revolutionary; in the auto industry such as a solar
powered moon roof that can cool the car on hot days, and also added the intelligent parking
assistant, similar to the one we see on Lexus commercials. Essentially the car automatically
parallel parks itself.
By maintaining relationships with the ‘Prius Pioneers’ who bought the first generation car,
Toyota was able to leverage this connection and a special purchase offer into approximately
1,200 pre-orders for the next generation vehicle. Toyota continued to work to educate the
early majority and mainstream consumer on how hybrid vehicle technology works by rolling
out television spots reminding consumers that the Prius doesn’t need to be plugged in.

Current demand for the Toyota Prius is exceeding supply in areas such as Los Angeles,
California, where the current waiting list is over a year long and consumers are paying
anywhere from $3,000 to $6,000

Challenges:
One of the greatest challenges of the future is to meet society’s mobility needs in a manner that
is sustainable. Over the next decade, 78 million people will be added to the world each year,
straining current mobility systems, spiking energy demand, depleting natural resources and
increasing emissions to our environment including greenhouse gases. It is estimated that by the
end of this decade, global population will reach 7.6 billion, with more than half of this
population living in urban areas where mobility issues are acute. Recognizing these trends,
Toyota created Global Vision 2020, which clearly identifies where it want to be as a company
and how it must operate in order to be sustainable in our rapidly changing world. At Toyota,
sustainability means that it consider the environmental, social and economic consequences of our
business, and continuously work to reduce the negative, and increase the positive impacts of our
activities and decisions. Sustainability challenges us to look at these impacts from all stages of
the vehicle life cycle, from the supply of materials, to design, manufacturing, sales, use and end-
of-life. It also encourages us to consider the opinions of, and work with stakeholders such as
local communities, non-governmental organizations and academia when it identify, prioritize
and address our impacts. They are fully committed to sustainable practices within our business,
and support our business partners, such as suppliers and dealers, in their efforts to operate
sustainably.
Beyond their own operations and those of our business partners, it understand that their vehicles
are part of a much larger mobility system. A mobility system includes aspects such as planning,
infrastructure development, traffic management, regulatory requirements, and various modes of
transport. To achieve sustainable mobility, municipalities, state agencies, public transit
authorities, urban planners, industry, community representatives and others that have certain
responsibilities in the mobility system must come together to forge a comprehensive vision and
strategy to collectively reduce impacts over time.
Responsibilities:
Toyota’s primary responsibility in this effort is to provide technologically advanced vehicles to
the marketplace that reduce environmental impacts, eventually replacing conventional
automobiles. They do not believe that sustainable mobility will be achieved with a single
technological solution, so they have undertaken a broad Comprehensive Environmental
Technology (CET) approach to advanced vehicle technologies, with hybrids at the core.
They also believe that they must collaborate with other organizations to find the best solutions to
the most challenging issues associated with developing and deploying advanced vehicle
technologies. This is why our sustainable mobility strategy includes products, partnerships, the
urban environment and energy solutions. They have made significant progress over the past year
in following this strategy, including:
• Advanced Technology Vehicle demonstration programs — fleets of Prius plug-in hybrid
vehicles (PHVs) and fuel cell hybrid vehicles (FCHVs), tested at partner locations;
• Diversified energy sources for our products — hydrogen for fuel cells, electricity for PHVs and
battery electric vehicles (BEVs), as well as low-carbon biofuels;
• Cooperative Agreements — with government entities, universities and industry partners on a
variety of advanced research projects;
• Support for infrastructure development — safe and accessible hydrogen infrastructure for
FCHVs, and electrified transportation infrastructure for PHVs and BEVs; and
• Thought leadership — participation in discussions and debates on sustainability and mobility
options for the future, such as Meeting of the Minds, Governors’ Global Climate Summit and
Sustainable Mobility Seminars.
In addition to Global Vision 2020 and their strategy, Toyota has other framework documents that
support their efforts, including their Guiding Principles, Earth Charter, and consolidated five
year Environmental Action Plans (EAPs). The material issues within their EAPs were identified
through analysis of impacts at all points of the vehicle life cycle, and are subject to our
governance structure for North America.