Final Project Toyota Indus Motor Limited Course: Strategic Marketing Section: (A) Pest analysis of TOYOTA:

Political factors: Stable political conditions and laws and regulations have major impact on every industry. In Pakistan the political factors are not so good. Pakistan is facing political instability since its foundation. But in recent years Pakistan is going for political stability as first time in Pakistan a democratic government completed its tenure and next elected government will soon take charge of position. The government policy related to imported cars was not so good for the industry because too many cars were imported which damaged the strength of local industry. Govt. decision to import 5 years used cars put a great pressure on industry. Toyota Prius was the most imported car in Pakistan in previous year. Dealers are importing huge number of used cars which are better than the local cars and in suitable price. But recently government changed the rule and now no one can import more than 3 years used car. Economic factors: Economically Pakistan is not good country in recent five years. 7 8 years ago the GDP growth was about 6% which declined to 3.7 % in 2012. Industrial growth also declined in Pakistan only agriculture growth was little satisfactory. The large scale manufacturing industry growth was 1.1% in 2012 which is also not a good indicator of economic position of Pakistan. The per capita income increased to 2.3% from 1.3%.

State bank of Pakistan lowered the discounts rate which is good according to investment point of view. The basic problem is inflation rate in Pakistan which was 10.8 percent in 2012. Inflation is Pakistan is too high which is resulting in decreasing purchasing power of customer. The population growth is increasing in Pakistan. Energy problem is increasing in Pakistan and becoming worse which is not a good sign for auto mobile industry because the cost of product is increasing because of energy shortage. The good thing for auto industry is that the growth of automobile industry is increasing despite of all other economic problems. Bank leasing also support this industry. Social Factors: Social factors in Pakistan are in the support of automobile industry. The population growth in Pakistan is high and People live in a joint family system but the culture is changing and people are leaving joint family system culture. Still average family members in Pakistan are high and cars are suitable according to the family structure of Pakistan so socially factors are in support of auto industry in Pakistan. Toyota is considered as a trusted company in Pakistan. In sedan cars Toyota is widely used and is famous in both rural and urban areas. Toyota cars are considered powerful engine cars. Technological Factors: Technological factors are also in favor of auto industry. Pakistan has low illiteracy rate but technological literacy is good in Pakistan. People are also aware how to use technological goods. Technical labor and workers are also available in Pakistan. Toyota is also considering introducing Prius hybrid car in Pakistan because of energy crisis and decreasing purchasing power of people but in this regard Toyota is facing some problems.

Competitors Analysis of Automobile industry

Mazda Strengths: Mazda is the only company producing winkle engine Produced iconic cars like the RX-7, Rx-8 & Mazda speed, the crossover CX-5,Miata MX-5 Mazda has established itself world wide Mazda is Japans 5th largest car producer Mazda cars are considered as fuel efficient cars Weaknesses: Mazda could not make strong brand name

 Hyundai

Mazda lacks in advertisement and marketing campaign Mazda has very low market share Mazda has very weak customer loyalty

Strengths: Strong research and development Brand name reputation is good Using resources effectively Weaknesses: Low market shares Low resale value Very low production Strength: Suzuki has good brand name in small cars Suzuki has largest market shares in small cars in Pakistan with Suzuki Mehran Suzuki has highest resale value in small cars like Mehran and Cultus etc. Suzuki car part are easily available and are low in price Suzuki cars are considered fuel efficient Weakness: Suzuki car has very low market share in sedan cars Suzuki research and development is weak Suzuki has high debt burden Strength: Honda cars have very good brand image Honda cars are considered as power efficient cars Honda cars have better car handling than Toyota Growth of Honda cars is increasing Honda is considered more stylish cars Weakness: Honda cars have low market share than Toyota Honda has no car for small car segment

Suzuki

Honda

Consumer behavior of automobile industry:

Consumer behavior changes from time to time, consumer to consumer and industry to industry. Consumer behavior of automobile industry is also changing. Todays economic situation of Pakistan is so bad. Pakistan is going through recessionary cycle.

Unemployment in Pakistan is increasing with the decrease in the growth of economy. Inflation in Pakistan is increasing and purchasing power of people in the country is decreasing. This economic situation has also a major impact on the behavior of consumer. But marital status, demonstration effect, bank leasing encourage the trend toward small and sedan cars even in income group of 20000 to 40000. We have selected a small sample of 100 people in Lahore out of which 74 male and 16 females were selected. 48% people belong to age group of 26 35 years. These people income ranging from 20000 to 120000 (largest income group in Pakistan). According to this small study more of the people are currently using Suzuki cars in small category. Suzuki Company has a good brand name and largest market share in small and fuel efficient car industry and the companies competing in this category could not win the market share and brand name like Suzuki. Suzuki mostly purchased car in small car category is Mehran followed by Cultus. Suzuki is so famous in small car category because it is cheaper, affordable, than the others, it has more resale value, spare parts easily available and low in price. That is why Suzuki has grabbed the maximum share in the market and acting as a leader in small car category. Some people are using Coure in this category. Toyota is on the second number on consumer preference. Toyota cars are famous in their sedan car category where they have large market share than others with their most famous brand Toyota Corolla. Toyota has established a very good reputation in this industry in such category. Toyota cars are considered more powerful than other if it comes to the engine. In sedan car category Toyota also has a very good resale value than others. The third preference of car in automobile industry for people is Honda. Honda has also established their brand very well. According to survey Honda cars are more famous in cities and considered more fuel efficient, stylish having luxury features. Honda City is famous brand in this category.

Table represents the survey of people using cars. People using cars Suzuki 50% Toyota 29% Fuel efficient 34% Honda 13% Hyundai 0% Others 8%

Reasons for using this car

Low price 40%

Brand name 10%

Luxurious 9%

Resale 7%

People who ranked preference about the cars mostly considered low price cars. As mentioned above that inflation rate is increasing and purchasing power is decreasing and it has also impacted the consumer behavior and now consumer prefer car that are low in price. The second feature that customer look in the car is the fuel efficiency of the car and it is mainly because of increase in fuel prices and inflation. The third thing that people look in the car is the brand name of the car and the fourth thing is luxury features of car, so the most of the people preference regarding cars is that the cars should be low in price and fuel efficient. The research data that were collected was mainly from people whose monthly income ranging from 20000 to 120000 in Pakistan. Facts show that 24% people are those whose income ranging from 20000 to 40000, and have a car with engine capacity up to 10000 cc.

Following table represents the data about consumer income and having cars:

People having cars 24% 20% 24% 8% 24%

Monthly Income 20000 - 40000 40001 -60000 60001 - 80000 80001 -100000 100000 120000

When people were asked about the future concerns about purchasing a car, most of the people in the survey preferred to purchase small car and hybrid cars the feature they want to look in the car are fuel efficiency. 27% People need safety because they travel with their families. 90% people said that they are affected with an increase in fuel prices and shortage of CNG. So 33% people like to buy hybrid cars.

Category consumer like/need

Small cars 52%

Hybrid cars 33%

Sedan cars 11%

Sports cars 3%

High roof 1%

Feature consumer like/need

Fuel efficient 44%

Safety 27%

Stylish 15%

Luxury 12%

Speed 2%

So the research shows that because of the current conditions in the currently people are more willing to purchase small and more fuel efficient cars and its an opportunity for the companies to attract this segment by introducing small and more fuel efficient cars.

Swot analysis of Toyota cars

Strengths: Toyota has maximum market share in sedan cars in Pakistan as it is very suitable for both urban and rural areas Toyota has very good brand image as well in Pakistan. People considered Toyota cars more powerful than others

Toyota financial position is also strong Toyota cars have more resale value than other cars like Honda it is because it is widely used in Pakistan. Toyota has also the best production facility located at port Bin Qasim industrial zone near Karachi with state of art technology Toyota cars parts are easily available and in low price than its competitors Another strength of Toyota cars is that they have swift distribution channel for supply of cars

Weaknesses: Toyota car breaking system is not so good. Breaking system of Toyota cars is spreading dissatisfaction among the customers Toyota cars have also problem in their door locking system as these cars are easy to be theft and most sedan cars stolen in Pakistan are Toyota cars Another weakness in Toyota cars is that they have too heavy body which results in high fuel consumption

Opportunities: The demand for small cars is increasing as purchasing power of people decreasing The demand for low fuel consumption is also increasing. People want low fuel consumption cars because of increasing prices of petrol in Pakistan The demand for hybrid cars is also increasing as the Toyota Prius is imported more than other cars in 2012 There is also demand for sports cars in Pakistan and people are now importing sports car too

Threats: The main threat for Toyota is from Honda cars as Honda cars are more fuel efficient from Toyota cars Toyota also facing threat from imported cars because it is decreasing their market share in local industry and they have to maintain low price and more features to avoid this threat Another threat in Pakistan is of energy crisis. Energy crisis results in high cost of production which may result in increasing prices of cars The purchasing power of people in Pakistan is decreasing and most of people cannot afford high price cars and high fuel consumption cars

 SEGMENTATION

GEOGRAPHICS:
Pakistans total population is divided in urban and rural market. Urban population is 36% of the total population. Urban population of Lahore is 8 million and contributes 13% of total urban Pakistan whereas urban population of Karachi is 13 million and contributes 22% of total urban Pakistan. Rate of urbanization is 3.1% annual (2010-15 est.) Consumption pattern of rural and urban Pakistan varies according to their behavior. In urban Pakistan mostly people used cars and prefer fuel efficient and luxury features in cars. Whereas in rural Pakistan durability is mostly preferred.

DEMOGRAPHICS:
Age Age is a major factor . According to estimation of 2009, in urban areas percentages of different age groups are given as follows: 0-15 years:43.4% (male 33,037,943/female 31,092,572) 16-64 years:53.09% (male 53,658,173/female 49,500,786) 65-over:3.5% (male 3,495,350/female 3,793,734)

Income: Out of 180 million population registered income tax payers are 1.7 million. It means only 1.8% population have more than 4, 00,000 P.A income. Marketers divide the consumers into small segments as per their income. Individuals are classified into segments according to their monthly earnings. Group Annual disposable income 1000000 or more 200000-1000000 0-200000

High income Mid income Low income

Socio-economic classes: As of 2011, according to the Time Magazine, the size of the Pakistani middle class, under prevailing economic conditions is estimated at 20 million, out of a population of 180 million. Representing 11% of the population of the country.

Social grade A1 A2 B C D E1 E2

Description of occupation Executives, upper manager, politicians, large business personnel Small business personnel, Managers Intermediate manager, administration, professionals Supervisor ,clerical ,junior administration or professionals Skilled manual worker Semi and un skilled manual workers state pensioner with other income, casual, lower grade earners

Passenger Cars Consumption Pattern across Urban Socioeconomic Classes

A1

A2

Executives, upper manager, politicians, large business personnel In this segment Toyota is targeting active businessmen, industrialists, and socialites who want to make a style statement are 35-45 year age group. Toyota has Land cruiser, Prado, Fortuner. Major competitors are Honda CRV, Nissan XTrail, Mitsubishi Pajero. Small business personnel, Managers In this segment Toyota is targeting middle to upper income professional in the age group of 35 to 45 who need comfortable ride and status symbol. Toyota corolla, Altis are in this category. Major competitors are Honda civic, City, Mitsubishi Lancer, Suzuki Liana, Nissan Sunny, Intermediate manager, administration, professionals In this segment Toyota is targeting the customers which mainly look for economy of operation, some luxury feature and design. Suzuki Swift and Hyundai Sentro is a major competitor in this segmentation.

 TARGETING

Our target market is y-generation, 20-26 years college or universities graduates in lower upper class, who are dependent in education and transportation, and job holders in middle class age 26-40, need fuel efficient feature in car. According to our survey it is 34% of total car users. Our target group is mid income group range between 300000 to 100000. These are Intermediate managers, administration, professionals, teachers, doctors and lawyers. Which is approximately 2 million of the total urban population. This segment is large and growing sharply as compared to others. This market is attractive so may be threat of new entrants in future. We want to launch Passo 1000cc car having lowest fuel consumption up to 20 miles per liter.

Product features
Toyota Passo 1.0 X CVT 1.0

Engine Capacity

1000cc

Price

1,025,000 (including import duty)

Fuel Type

Gasoline

Transmission

CVT

Fuel efficiency

Min 14 miles per liters, Max 20 miles per liter

Basic Specification Drive System Front Length (mm) 3640

Riding Capacity (Person)

Width (mm)

1665

Weight (kg)

910

Height (mm)

1535

 POSITIONING

Target group: 25-40 years middle class professionals like Intermediate managers, administration, teachers, doctors and lawyers. Need of target group: Need cars at low price and fuel efficient mainly because of increase in inflation rate and fuel prices and shortage of CNG. Our brand is (point of parity): Fuel efficient cars. Point of Differentiation: 1st fuel efficient car in Pakistan having mileage of 20 miles per liter. Concept: This brand is most energy efficient, stylish, having some luxury features and affordable for middle class without conversion of CNG.

Positioning Statement To age 25-40 middle class personnel, who seek fuel efficiency, style and luxury and dont like hassle of long CNG queue in current era, Passo is a small, fuel efficient car that gives them more mileage and more style than any other brand.