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Emerging Market Strategy of Toyota

The Emerging Market Opportunity

The global automotive market was highly competitive and competition


was likely to intensify further with continuing globalization. The factors
affecting competition included product quality and features, safety,
reliability, fuel economy, the amount of time required for innovation and
development, pricing, customer service, and financing terms. With
growing economies and a low vehicle penetration rate, emerging
markets were considered as the key source of growth for the global
automobile industry. According to the International Monetary Fund,
between 1988 and 2011, while the developed markets' of global GDP
declined from 61% to 49%;

Toyota's Strategy In Emerging Markets

Toyota's presence in the emerging markets dated back to the 1960s when it used to sell vehicles in markets like Taiwan, Brazil, South Africa, Thailand, the
Philippines, Malaysia, Russia, and China. In the initial years, Toyota was mostly exporting vehicles from Japan to these countries as it only had production
facilities in Brazil, South Africa, and Thailand. During the 1970s, Toyota started producing multipurpose vehicles in the Philippines and Indonesia as families
in these two countries tended to be large and therefore vehicles that could be used both for business and family were preferred. In 1976, Toyota launched
the Tamaraw in the Philippines followed by the Kijang in Indonesia in 1977. In the 1980s, Toyota started producing vehicles in Taiwan and Malaysia followed
by India in the 1990s. By the 2000s, Toyota had production facilities in all these emerging markets (See Exhibit IV). . ...

Expanding Production In Emerging Markets


In an effort to increase its presence in the emerging markets, Toyota began strengthening its supply system in the emerging markets and increasing
localization. During the 2000s, the company set up a local parts distribution network and a supply chain to provide greater autonomy to affiliates in the
emerging markets.
Toyota's presence in South East Asia dated back to the 1950s. By 2012, Toyota had 14 production companies in Thailand, Indonesia, the Philippines,
Malaysia, and other Southeast Asian countries. Under the Innovative International Multi-purpose Vehicle (IMV) project launched in 2004, Thailand and
Indonesia became Toyota's global production centers. By 2012, Toyota was the market leader in Thailand, Indonesia, the Philippines, Taiwan, Brunei, and
Vietnam. . ...

Pusing Sales In Emerging Markets

The IMV Project was intended to create an efficient production and distribution structure for pick-up trucks and multipurpose vehicles to meet the needs of
consumers globally. Toyota applied the genchi genbutsu' approach to observe and analyze the needs of each region and the types of vehicles used in those
regions to develop and introduce IMVs. The IMV project included manufacturing diesel engines in Thailand, gasoline engines in Indonesia, and manual
transmissions in the Philippines and India. The IMV project adopted a leaner development process based on a common platform, and developed five
vehicles: three pickup trucks, a minivan, and an SUV, especially developed in 2004 for launch in over 140 countries (See Exhibit VI). ...

Competition

Though Toyota was still the #1 automaker in mid-2013, its position was coming under threat from a resurgent GM and Ford in the US market. Competition
was catching up in the hybrid car market too. In its home market, the company was hit hard in late 2012, after government incentives for consumers to buy
fuel-efficient models expired. In 2013, the Yen declined more than 12% against the dollar. In emerging markets, Toyota had to contend with intense
competition from other Japanese companies such as Nissan, Honda, and Suzuki, some of which had managed to entrench themselves in key emerging
markets. Companies such as GM and Germany-based Volkwagen were also pushing ahead with their own emerging strategies. In 2012, Volkswagen
became the most profitable automaker in the world with an operating income of 11.5 billion (US$15 billion). The company had announced plans to invest
10.3billion (US$13.6 billion) to expand production in China between 2011 and 2015. In 2012, Volkswagen had an 18% market share in China, 22% in Brazil,
9% in Russia, and below 5% in India. Though Toyota was the largest player in Thailand and Indonesia, in China, it had been pushed to the fifth position
behind GM, Volkswagen, Nissan, and Hyundai. ...

Volatlity In Emerging Markets

In 2008 and 2009, analysts were expecting emerging markets to become a safe haven for investors, considering the recession in the US and Europe post
the global financial crisis. But as of 2013, while developed economies seemed to be strengthening, the emerging markets had underperformed in the
previous couple of years. Analysts were also concerned about the vulnerability of the emerging markets which reacted strongly to modest changes in the
world economy. In mid-2013, many emerging markets were struggling with rapid depreciation of their currencies. Countries such as Brazil, India, South
Africa, and Indonesia were among the worst affected. Between May and September of 2013, while the Indian Rupee fell by 21%, the Brazilian Real fell by
17%, followed by the Indonesian Rupiah (15%), the Thailand Baht (8%), and the Russian Ruble (6%). Central banks in key markets like Brazil and India
were working frantically to prop up their currencies. ...

The Road Ahead

As of mid-2013, Toyota pursued the emerging market strategy with Asia as its second mother base'. According to Toyota's Global Vision, the company aimed
to implement its IMV Project strategy in the emerging markets by continuing to fortify its core models along with new hybrid models. It would also strengthen
its production and supply bases, and enhance its cost competitiveness by 100% localized procurement. ...

Exhibits

Exhibit I: Toyota's Consolidated Vehicle Production and Sales (2008-2012)


Exhibit II: Toyota's Consolidated Financial Performance (US GAAP) (2008-2013)
Exhibit III: Car Production in Emerging and Developed Countries
Exhibit IV: Toyota in Emerging Markets
Exhibit V: Toyota's Global Vision
Exhibit VI: Toyota's Emerging Market Dedicated Models
Exhibit VII: IMV Series Annual Sales Volume
Exhibit VIII: IMV Series Vehicle Sales by Region
Exhibit IX: Toyota's Vehicle Sales in Emerging Markets (2000-2011)

A Case Study Of Toyota Marketing Essay


Published: 23, March 2015

History of Toyota
The roots of the motor cooperation can be dated back to 1890s when Sakichi Toyoda designed an operated loom.
Toyoda designed and patented a manually operated loom which automatically stops the machine when a thread broken
in weaving cloth that greatly improved worker productivity and avoiding the production of defective cloth (Meyer, 2005) .
Kiichiro Toyoda and Taiichi Ohno were greatly influenced by American industrialists and Production and management
practices (Ohno, 2008). The correct practice of Toyota's management system - Lean management - would require, at a
minimum, acknowledgement and practice by management of both principles: "continuous improvement" and respect for
people (Meyer, 2005) .
Toyota Motor Corporation is considered to be the number one automobile maker in Japan and it's the second largest
manufacturer in the world after General Motors. It has an international presence in more than 170 countries. The sales
turnover of 131,511 million in 1997 and sales growth of 29.3% makes company more strong in the financial base. It
uses advertising techniques to identify and satisfy customer needs. Its brand is a household name.

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The cooperation is one of the trusted names with brand of quality, performance and being consistent with the
environment needs. The motor cooperation is considered of the top brand quality in the international sector and it has
successfully penetrated in the global markets. It was able to enter the markets in the Asian as well as the European
areas along with making a tough competition to the rivals such as Ford, GM.
The Toyota Motor cooperation was able to enter the automobile sector because of its innovative designs, marketing
techniques, global acceptance and the quality of the production. The company has been a front participant in the
innovation of the automobiles. It was one of the first automobile manufacturers to start lean manufacturing and its
purpose was to make

Lean manufacturing and Just in Time


The process is much quicker. The lean manufacturing system which is also known as the Toyota Production system is a
well-organized process by which the there will less waste compared to the conventional and queue technique of
production. The new production system also applied smart automation and Just in Time manufacturing (JIT).

The success of the company can be measured from its product development. The Cooperation has reputation of
developing cars which are safe to the environment with high-quality performance and more fuel resourceful. It was the
first automobile company to market hybrid cars based on gas and electric fuel in advance of the associate competitors.
This design was marketed to remain with the governmental regulations as to compensate the international economic
changes with rise in the increase in prices of fuels all around the world.
The Toyota Motor Company made a worldwide manufacturing representation and it moved the sites of production of the
different parts of the car to different locations in the world. The sites of the manufacturing are high-priced and require
costly investments. So this new method by the motor cooperation has been successful in reducing the cost of the mass
production. This move has been triumphant in the cost effective programmes compared to the production and
assembling of the cars in one setting.
The Toyota Production System (TPS) was ventured by the company and it was developed by Taiichi Ohno,Shigeo
Shingo and Eiji Toyoda between 1948 and 1975.The system is composed of various components. In Toyota Taiichi and
Shigeo integrated the Ford production and techniques to develop the TPS. It was based on the central role of inventory.
The main areas of the lean manufacturing are: Cost, Quality, Delivery, Safety and Morale.
The motor company made valuable decisions by considering that the factory labours are contributing than the muscle
influence. In TPS there was in cooperation of team development and cellar manufacturing considering the respect of the
factory workers.
In this lean production system there were opportunities for potential new products and this varied nature will help the
company to cope with numerous and innovative products. Shigeo Shingo based on the suggestion by Ohno reduced
setups to minutes and seconds authorized minute batches. This reduction of setup, in the company introduced flexibility
in the motor cooperation.

Advantages of the lean production:

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80% reduction in waste production.


50% reduction in cost production.
50% of decrease in the manufacturing cycles.
50% reduction in Labour in the process.

The customer services are increased due to the inventory reduction by 80%.
Increase in the current amenities by 50%.
Quality improvement
Privileged profits
Advanced system flexibility to accommodate the changes and improving the requirements.
Further tactical strategies
Increasing the shipping and billing and thus improving the cash flow.

Drawbacks of Lean production


The lean production is not with any faults as there are some failures which can be summarized as
Executive issues
Cultural issues
Management issues
Implementation issues
Technical issues.
Mejabi (2003) stated that "each one of these categories is important and if taken into consideration can cause possible
obstacles in the path to lean manufacturing" These are interconnected to each other.
Steve L. Hunter lists ten steps to put into practice a lean production system: which consists of the following:
Obtain the manufacturing system
Decrease setup
Incorporate quality control
Combine preventive maintenance
Level and equilibrium the system
Add a pull system
Manage inventory
Computer integrated manufacturing benefits
Programme with vendor.
The international market openly accepted the lean production system and included to attain maximum productivity. The
application of the principles of the lean production is confronted with elevated pounding excellent performance results.

These principles are made played in the world by most of the companies for eg: Kia Motors in Korea. The Kia Motors in
Korea made change from supply oriented production system to a flexible lean production approach. The company
implemented lean production approach in the plant in Sohari where the skills of the factory workers were utilised
completely based on the in agreement relations between the company and employees. Thus the KIA Company
produced a hybrid production system at Sohair plant and it was more flourishing than the plant in Asan.

M.PORTER`S GENERIC STRATEGY MODEL


Target Scope
Advantage
Low Cost
Product Uniqueness
Broad
(Industry Wide)
Cost Leadership
Strategy
Differentiation
Strategy
Narrow
(Market Segment)
Focus
Strategy
(low cost)

Focus
Strategy
(differentiation)

(coursework4you)

Toyota Porter's Generic Model


As Porter's Generic Model is important for all kind of the business to improve the business performance similarly it is
important for the Toyota to improve the business and compete in the automobile industry. From the Porter Generic
model the Toyota mainly focusing on differentiation strategy and in the same time cost leadership. One of the biggest
priorities for these companies is to produce high quality products with lower prices and also cut the carbon emission
because most of the government . The Toyota is investing huge amount of the budget on the product quality and
alternative products. The key to the success in the car market is new model which stimulate demand and loyalty to the
Toyota brand. Toyota has reputation for producing cars which are greener, more fuel efficient and of good performance.
Through the developments of hybrid fuels. The Toyota was the first car manufacturer to market hybrid (gas and electric)
fuel with the launch of Prius model ahead of compotators. (Businessteacher).

Competiveness
In the context of international competitiveness of industries in developing countries there are five elements which can be
recognized as most tactical and they are:
1) Technology,
2) Human resources,
3) Organisational structure,
4) Government
5) Role of capital and finance.
The lean production system was introduced and was incorporated in the India. The lean production made the Indian
firms to improve the quality and reduce the production costs.
This will help the Indian firms to become suppliers in the international markets and thus obtain profits by lowering the
costs. The flexibility and minute batch production was tailored to the customers and it meets up the deliverance of
schedules. This lean production system boosted and lowered the recession in the internal markets by taking exports.
The increasing demands of the resources were effectively used and there was efficient consumption of the resources in
the internal markets.

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The most strategic element in achieving the competitiveness is to incorporate change.


There should be improvement and tailoring the technology for the needs of the customers so that there will maximum
productivity.
There should be purchasing power with the help of the governmental regulations and prioritize the public investment.
The regulations should employ at the same time in one location so that there will be more production in the firms.
To achieve greatest thrust to efficiency and productivity this will help in reducing costs. This can be achieved by give by
the integration of agriculture economy with industrial economy, of the small units with large units and of manufacturing
with services sector.

Conclusion:
The Toyota is leading company in the Japan and well reputed in the world automobile industry. The company mission is
to build trust and confidence with customer by delivering outstanding quality products and service. For that Toyota is
investing huge amount of the budget on the R&D to produce new things for the customer by saving the environment.
According to the Toyota the environment responsibility is the cornerstone for the good business in new world. Where
Toyota is gaining the advantage of the first mover in the Asian market as its compotators could get this advantages. The
Toyota is targeting all segment of the market in world and producing differentiation and cost leadership products to get
more market share of the automobile industry
Profits increased from 0.8% to 1.17 trillion yen ($11bn; 5.85bn), while sales were 7.3% higher at 18.55 trillion yen. In
2003 Toyota knocked its rivals Ford into third spot, to become the World's second largest carmaker with 6.78 million
units. The company is still behind rivals General Motors with 8.59 million units in the same period.
The strength of the company is its diversified product range, highly targeted marketing and a commitment to lean
manufacturing and quality. The company also maximize profit through efficient manufacturing approaches

Toyotas Marketing Mix (4Ps) Analysis


UPDATED SEP 25, 2015 CHRISTINE ROWLAND

A Toyota Voxy ZS.


Toyotas marketing mix involves a diverse set of strategies for its product lineup, place and distribution, and promotion. The
company uses different pricing strategies. (Photo: Public Domain)
Toyota Motor Corporations marketing mix (4Ps) reflects the firms strategies for interacting with its target
market. As one of the leading firms in the global automotive industry, Toyotas target market is diverse in terms
of consumer preferences and regional and local market conditions. As such, the companys marketing mix is
tailored to address these variations. Founded in 1937, Toyota has grown from a local business to a leading
global player in the automotive industry. The firm now has operations in all regional markets, except Mongolia
and some parts of the Middle East and Africa. Toyotas continuing global success highlights the firms
effectiveness in developing and implementing its marketing mix.
Toyotas marketing mix (4Ps) is the companys strategies for its product mix, place or distribution, marketing
communications or promotional mix, and pricing. Its current global success partly indicates Toyotas
effectiveness in implementing its marketing mix.

Toyotas Products (Product Mix)


Toyota has a diverse set of products. This element of the marketing mix identifies organizational outputs for the
target customers. The following are the product lines in Toyotas product mix:
1.

Toyota automobiles

2.

Lexus automobiles

3.

Welcab series

4.

Marine products

5.

Spare parts and accessories

6.

Engines
Toyota automobiles are the most popular in this product mix. Lexus automobiles are luxury products from the
company. On the other hand, the Welcab series are Toyota automobiles modified for the elderly and people with
disabilities. The company also manufactures yachts, engines, and spare parts and accessories for automobiles
and marine products. This part of the marketing mix shows that Toyota reaches a wider market and reduces
market-based risks through a diverse product mix.

Place/Distribution in Toyotas Marketing Mix


Dealerships are Toyotas main places for distributing its products. This element of the marketing mix
determines the venues where customers can access the firms products. The following are the main places in
Toyotas distribution strategy:
1.

Dealerships

2.

Retailers
Toyota dealerships are where most sales transactions occur. However, some retailers like auto supply stores
also sell the companys products, such as spare parts and accessories. This part of the marketing mix shows
that Toyota relies heavily on dealerships to sell its products to the target market.

Toyotas Promotion (Promotional Mix)


Toyotas promotion strategy covers all the tactics of marketing communications. This element of the marketing
mix pertains to how the firm communicates with the target market. Toyota uses the following promotion
activities, arranged according to significance:
1.

Personal selling

2.

Advertising

3.

Public relations

4.

Sales promotion

5.

Direct selling
Toyota uses personal selling through dealerships sales personnel, who personally promote products to potential
buyers. The company also uses advertising on various media, such as TV, newspapers, and websites. In
addition, the firm promotes its products through public relations, such as the Toyota TogetherGreen program
that supports environmental initiatives, and the Meal Per Hour program that donates food to Food Bank. These
public relations activities create a positive brand image for Toyota. On the other hand, infrequent sales
promotion is used through special deals. Also, the company sometimes uses direct selling for corporate clients.
This part of Toyotas marketing mix indicates that the company has a comprehensive strategy for promoting its
business and products.

Toyotas Prices and Pricing Strategy


Toyotas prices vary widely, depending on the product line and the product type or model. This element of the
marketing mix identifies how the firm sets the prices of its products. Toyota uses a combination of the following
pricing strategies:
1.

Market-oriented pricing

2.

Value-based pricing

Toyota uses the market-oriented pricing strategy to determine prices based on market conditions and the prices
of competitors. This pricing strategy is notable in the vast majority of Toyota products, such as sedans and
trucks. However, the firm also uses the value-based pricing strategy, which sets prices based on the actual and
perceived value of the product. The company uses value-based pricing for high-end or more expensive
products, such as the Prius and Lexus cars. This part of Toyotas marketing mix shows that the company
determines price levels based on market conditions and customers perceptions.
References

Dominici, G. (2009). From marketing mix to e-marketing mix: a literature overview and

classification. International Journal of Business and Management, 4(9), 17-24.


Goi, C. L. (2009). A review of marketing mix: 4Ps or more? International Journal of Marketing

Studies, 1(1), 2.
Rahmani, K., Emamisaleh, K., & Yadegari, R. (2015). Quality Function Deployment and New Product

Development with a focus on Marketing Mix 4P model. Asian Journal of Research in Marketing, 4(2), 98-108.
Toyota Motor Corporation (2015). Product Lineup.

Toyota Motor Corporation (2015). Spare Parts, Accessories, and Marine Products.

Toyota Motor Corporation Annual Report 2015.

Yun-sheng, W. (2001). Perfection and innovation of 4P Marketing Mix How to evaluate 4P Marketing
Mix. Commercial Research, 5,

GM recently issued a massive recall of over 8.4 million vehicles to become the world's recall champion. All of these are in North America with the
vast majority of faults attributed to ignition switch defects. The number of vehicles recalled by GM is approaching 30 million worldwide. Toyota are
also well known for recalling vehicles - the Japanese firm has already issued a massive 6.4 million vehicle recall in 2014. 27 different models were
affected including the Corolla and Yaris. Steering brackets, seat rails, engine starters and airbag starter cables were the primary issues leading to
the recall. Toyota has been forced into more recalls than any other manufacturer in recent years.