Table of Content

1. Introduction..............................................................................................................................5
2. Concept of International Marketing.........................................................................................6

Definitions of International Marketing.............................................................................................6

American Marketing Association.....................................................................................................6
A Comparison of Domestic Marketing with International Marketing.............................................6
3. Challenges Firms Faced In International Marketing................................................................6

1.

Political & Legal Environment..................................................................................................7

2.

Cultural Environment................................................................................................................7

3.

Competitive environment..........................................................................................................7

4. Five Steps of theInternational Marketing Process....................................................................8

1.

Analysing Marketing Opportunity............................................................................................8

2.

Selection of Target Market........................................................................................................8

3.

Offers to Potential Customers...................................................................................................9

4.

Developing the International Marketing Mix............................................................................9

5.

Proper Implementation of Marketing Program.........................................................................9

Advantages for companies...............................................................................................................9

Benefits for Customers...................................................................................................................10
5. Toyota Motor Corporation......................................................................................................10
6. Vision......................................................................................................................................12
7. Toyotas Global Vision...........................................................................................................12
8. Mission...................................................................................................................................12
9. Toyotas Mission....................................................................................................................12
10. Principles of Toyota................................................................................................................13
11. Corporate Strategy..................................................................................................................14

Core competencies.........................................................................................................................14
DistinctiveCompetency..................................................................................................................15
12. Industrial Analysis..................................................................................................................15
13. Competitor Analysis...............................................................................................................16
14. Costumer Analysis..................................................................................................................17

Who Are Toyotas Customers?.......................................................................................................17

Why Toyota?..................................................................................................................................17
15. SWOT Analysis......................................................................................................................18

1.

Strength...................................................................................................................................18

2.

Weakness.................................................................................................................................19

3.

Opportunities...........................................................................................................................20

4.

Threats.....................................................................................................................................21
1

16. International Marketing Strategy............................................................................................22

Toyota European Market................................................................................................................26

Toyota US Market..........................................................................................................................26
Toyota Australian Market...............................................................................................................27
Toyota Other Market......................................................................................................................27
17. Market Segmentation Strategy...............................................................................................28

How do Toyota Choose its Customers Target Market?..............................................................28

18. Positioning Strategy...............................................................................................................28

Differentiation................................................................................................................................29
19. Toyotas Marketing Mix Strategy.......................................................................................29

Product Strategy.............................................................................................................................29
Pricing Strategy:.............................................................................................................................30
Place / Distribution Strategy:.........................................................................................................30
Promotion Strategy:........................................................................................................................31
20. Value Chain Analysis..............................................................................................................31

1.

Inbound Logistics....................................................................................................................32

2.

Operation.................................................................................................................................32

3.

Outbound Logistics.................................................................................................................32

4.

Marketing & Sales...................................................................................................................32

5.

Service.....................................................................................................................................32

21. Conclusion..............................................................................................................................32
22. References..............................................................................................................................35

ACKNOWLEGEMENT

To list who all have helped me is difficult because they are so numerous and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in the
completion of this project
I take this opportunity to thank the University of Karachiforgiving me chance to make this report.
I would also like to express my sincere gratitude towards my report guide Prof. Mr. Tahir Raza
whose guidance and care made the completion of report successful.
I would like thank my colleague Mr. Noman Kazim Siddique at INDUS MOTOR COMPANY
for providing the necessary facilities and literature required for completion of this project.
Lastly I would like to thank each & every person who directly or indirectly helped me in
completion of the report.

EXECUTIVE SUMMARY

Until a few years ago, the international market had been an avenue to absorb the spillover from
extra production. The entrepreneur used to look at export only if he could spare part of his
production after meeting the national domestic demand. With the economy opening up its doors to
international manufacturers and marketers immediately after foreign exchange crunch of the early
90s, however the scenario changed rapidly.
Today, international market offer unlimited opportunities to companies like Infosys, Wipro,
Videocon, Ranbaxy, Dr. Reddys Labs, Asian Paints and many others. As a result, these firms now
look at international markets to gain global competitiveness through technological advancement,
superior marketing strategies and continue product and service innovations.
This is a study on Toyota automobile industry. The work mainly focuses on thestrengths and
weaknesses as well as the companys way of keeping competitive advantage. The purpose of
thestudy is to explore the marketing strategy of Toyota Motor Corporation globally. It is an
explorative study in nature.Both primary and secondary data are used to get the insights about the
market.
Toyotas success both on the Japanese market and internationalmarket is due to its desire to make
products with high quality. The Japanesebelieve that nothing is so good that it cannot be improved,
so they constantlystruggle to increase the quality of everything they do. This attitude can
beexpressed by a single word:Kaizen. It means continuous improvement andis the key word to
guide them towards perfection. This paper presents thestrategies of Toyota Company in their
attempt to gain supremacy in theinternational market.

Introduction
There are 192 countries in the world, each offering an independent yet interdependent market to
manufacturers, service providers and knowledge and skill- based marketing operators. The
domestic markets now face competition not only from within but even from all remote corners of
the world. The multinational and transnational firms offer tough competition to the domestic
industry by setting very steep and high standards.
The automotive industry is the worlds largest manufacturing industry by volume, capital,
employees and annualturnover. Hundreds of companies have jumped over to grab their own
provision in this industry.
Toyota amongthem is a story of the difficulties faced and hurdles overcome to getting a far eastern
Asian product into theglobal market. Toyota Motor Corporation is the worlds third largest car
manufacturer. GM and Ford occupy thefirst and second position respectively according to the
annual sales. The company recorded revenues of $202,864000 in the year ended on 31-03-07
(Yahoo Finance, 2007), which is 13.28% higher than the previousyear. The operating profit of the
company was $189, 64000. Toyota sells its vehicles in more than 170 countries,producing more
than 5.5 million vehicles per year, equivalent to one every six seconds. Toyota has broken
thetraditional narrow marketing framework. Toyota transformed its marketing tactics into a
company-widediscipline practiced by anyone. Simply, marketing became a coordinated crossdisciplinary function in Toyota.For Toyota, customers are not the sole responsibility of the
marketing department but of the company as a whole.These factors have together stalled marketing
from becoming a coordinated activity that involves other functionssuch as finance, operations,
human resources and strategy within any company.
Toyota is worlds leading automobile company which has distribution network in majority of the
countries around the world. The vehicles designed by Toyota are considered to be one of the best in
their class. The product portfolio of Toyota extends for target segment in every age group as well as
income group. The major success factor of Toyota is considered to be the excellent product quality
as well as marketing efforts. The quality and innovation of Toyota is the unique selling proposition
in the cars segment and this is the reason why this Japanese company has taken over automobile
market around the world. Many innovations around the world are credited to Toyota like just in time
approach was introduced by Toyota only. This approach is highly successful approach which is
being utilized by the almost all the companies around the world. This phenomenon has changed the
world of operation function in the companies where manufacturing and processes are of critical
importance. International marketing strategies have also played critical role in making the brand of
Toyota as invincible in every country they forayed. These international marketing campaigns were
successful in every nation and tailored according to the customer behavior and psychographic as
well as demographic conditions of the country. Same strategy was being utilized in the china by
Toyota and devised many effective as well as impactful international marketing campaigns.

Concept of International Marketing

It is concerned with the micro aspects of a market and takes the company as a unit of analysis. The
purpose is to find out as to why and how a product succeeds or fails in a foreign country and how
marketing efforts influence the results of international marketing.

Definitions of International Marketing

International Marketing is the performance of business activities that directs the flow of
goods and services to consumers or users in more than one nation.
-

Cateora

It is the performance of business activities designed to plan, price, and promote &direct the
flow of a companys goods & services to consumers or users in more than one nation for a
profit.
-

Cateora &Graham

International Marketing is the multi-national process of planning and executing the

conception, prices, promotion and distribution of ideal goods and services to create
exchanges that satisfy the individual and organizational objectives.

American Marketing Association

The process of planning and conducting transactions across national borders to create
exchanges that satisfy the objectives of individuals and organizations.

International Marketing can be defined as exchange of goods and services between different
national markets involving buyers and sellers.
A Comparison of Domestic Marketing with International Marketing
Some of the comparative advantages and disadvantages of both marketing systems remain similar.
The firms undertaking international & domestic marketing follow the same basic principle of
marketing. i.e. they adhere to the rules for selecting products that are design on the basis of
customers needs, fix the price band according to the segment they want to cater to, look for
logistics and distribution channels necessary to reach the end consumer in cost effective ways and,
fully, in order to generate necessary demand, these companies also undertake country- specific
promotional efforts for international marketing. Yet, at times, international marketing poses
problems to the firms at their different levels of operational efficiency such hurdles make
international marketing more challenging than domestic marketing.
Challenges Firms Faced In International Marketing
There are many causes that affect the macro environment concern with automotive industry.
Analyzing the external environment, the PEST framework is used as tools to consider major factors,
which affect the business and to create key driver of change. This can identify influential effects in
each area, which can consider key success factors of company.

1. Political & Legal Environment

The firm doing business with different countries have to follow rules, regulation, trade laws,
taxation laws, and contractual obligation e.g. a number of countries may follow English law,
countries in some other parts of the world may have their own systems and laws devised.
Besides, local administration in each country would prefer controlling the international
imports to their country in order to protect local industry through non-tariff and non-tariff
barriers.Similarly, political ideologies of the nation may not see eye to eye. But an
international firms public relations activities will ensure that it overcomes all such
challenges, when entering into business with such nations. Some of the U.S expatriate
managers are expert in handling such situations, as almost all U.S based firms face some
hostile nation or the others. Yet, they manage their relationship in such a manner that the U.S
multinationals keep growing.This factor is most related government policy such as taxation
policy and trade tariff. Because manufactures import some vehicles and parts from other
countries, firms need to pay for the tariff for buying. Costs of products will be increase, if
government increase import tariff. This is the challenge that company faces fluctuation of
cost.
2. Cultural Environment
The cultural environment poses yet another challenge to marketers at the international level.
Differences in the customs and traditions followed by different communities around the
world can lead to situation where communication with the consumers, users and customers
can be misinterpreted. The variation in semiotics, values, ideas, attitude, beliefs,
assumptions and traditions pose a challenge to the international marketing manager. The
manager must identify similarities and disparities in cultures and take steps for adaptations
in different countries. Economic growth affects spending of people by changing buying
power, for example, the economic crisis impact decrease of salary, increase of
unemployment that people are difficult to buy products because they have less income.Some
people select to buy products since they can reveal the social status of consumers and some
people are still reputation in brands. Moreover, the trend of family structure has changed and
customer needs will be different. Toyota has not only positioned itself in middle market by
using the Toyota brand but also launched Lexus for luxury brand which firm has wide range
of product.
3. Competitive environment
Taken in the right spirit, competition can spur an organization to excellence. At the same
time, however, it can be dispiriting if the opponents indulge in tactics, for instant they may
employ strategies to block channels of distributions, devise prohibitive trading contracts,
resort to negative advertising policies and either suddenly raise prices or lower them. Pepsi
and Cock have often indulged in similar fierce competitive fights.
Technology is one of the important factors of environmental impact on organizations,
technologies change quickly while companies have invested in research and development to
respond needs. Innovative technology can provide more opportunities in particular energy
conservation issues such as fuel consumption and alternative energy technology.

Five Steps of theInternational Marketing Process

1. Analysing Marketing Opportunity

Analysing international marketing opportunities to identify unfulfilled or under fulfilled
needs that a marketer may satisfy through its products or services. This analysis can be done
through information seeking and analysis or through market research. A marketer may have
a product or service concept developed first and looks for the needs in the market that can be
satisfied by these products or services. The marketer may also first identify unfulfilled or
under fulfilled needs in the market and then develop a suitable product or service offer to
satisfy these identified needs.
2. Selection of Target Market
Once the marketer has identified the potential opportunities in the first step now is the time
to select the groups of potential international customers (target markets) to whom to sell the
products or services. This step also involves identifying the potential buyers, demand
measurement & forecasting, market segmentation, market targeting & market positioning.
Segmentation involved identifying groups of potential customers from the total potential
market that are homogeneous on certain aspects of identity and behaviour and are
heterogeneous on the same aspects from others in the target population. This step also
requires the marketers to decide what key benefits in a product or service to offer to the
selected target customers and on what aspects to differentiate from the competition.

3. Offers to Potential Customers

Since a firm needs to offer best value to the potential customers to makes its products and
services more profitable compared with competitors, firms have to adopt appropriate
business and marketing strategies. Many activities are to be undertaken in a firm by many
people and in a number of departments to produce and deliver final products and services to
its customers, this requires aligning and coordinating numerous activities and efforts. At the
same time to achieve best value for the buyer and bet profits for the firms, the firm needs to
optimize all the activities, efforts undertaken and resource utilization. This requires the firm
to adopt a coherent and appropriate logic or strategy to direct and control the alignment,
coordination and optimization of its business and marketing effort.
4. Developing the International Marketing Mix
The fourth step in the marketing process is developing the international marketing mix,
product, place, price & promotion. Marketing mix identifies four key areas for developing a
well-coordinated marketing strategy. To create a strong marketing impact a firm needs to
develop appropriate programs in these four key areas and also need to ensure that all these
four aspects of a firms marketing program are well coordinated and in conformity with each
other to give a clear image to the target market of the firms brands and its products.
5. Proper Implementation of Marketing Program
Developing a good marketing program is not good enough for success. A firm also needs to
manage the international marketing effort properly. Quite often firms fail not because they
did not have a viable marketing program, but that they failed in properly implementing their
well-designed plans. Firms also need proper analysis, planning, implementation and control
of their marketing programs.

Advantages for companies

Employees with the necessary know-how and skills to develop holistic solutions for
customers.

Interdisciplinary insights into business processes.

Interrelated understanding of product and services marketing and sales and service
execution for global brand management.

Country-specific marketing, sales and service concepts.

Competitive advantage through the combination of service, marketing and sales.

Graduates with relevant practical experience.

Knowledge transfer from student and research projects.

Successful tool to improve employee retention/loyalty.

Benefits for Customers

When products and services conform to International Standards consumers can have
confidence that they are safe, reliable and of good quality.

For example, ISO's standards on road safety, toy safety and secure medical packaging are
just a selection of those that help make the world a safer place.

International Standards on air, water and soil quality, on emissions of gases and radiation
and environmental aspects of products contribute to efforts to preserve the environment and
the health of citizens.

Toyota Motor Corporation

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from
his father's company Toyoda Industries to create automobiles. Toyota Motor Corporation when
incorporated has many strengths being one of the industry leaders in the automotive industry.
Toyota has three major brands underneath the company umbrella; Toyota, Lexus, and Scion. By
having these three distinct brands, it lets the company reach many sectors of the globe in a choice of
vehicle for customers. They produce their vehicles and target specific global regions. Toyota has
traditionally also been the leader in Total Quality Management or TQM. The belief that no process
could ever be declared perfect, and that therefore there was always room for improvement was
introduced by Toyota Sakichi (Financial Times). This brought about the Japanese word, Kaizen
meaning continuous improvement. By using the Kaizen theory of continuous improvement, Japan
caught up the U.S. auto makers during the 1980's.Toyota began with an A1 prototype passenger car
in 1935 in Japan, opened its U.S. operations in 1957, and became the number one carmaker in the
world in 2007.
Until the early 1980s, Toyota met foreign demand by exporting CBU and CKD vehicles. But as the
sudden increase in exports led to increased trade friction and as economic conditions grew more
volatile, Toyota started full-scale efforts to produce its products overseas.
Toyota is a very innovative, customer oriented, well-organized company. Although Toyota is the
third largest carmanufacturer in the world, its market share in some regions does not seem lucrative.
Its probably for the customersloyalty to the local or continental manufacturer. In this
circumstances Toyotas marketing objective couldunderpinned by the intention of achieving larger
market share. Toyota believes in the relentless pursuit ofexcellence in every operation so Toyotas
marketing objective is mirrored by the philosophy of providing thebest customer experience along
with the relationship marketing. Toyota has also introduced its newest hybrid power car, Toyota
Pirus, at the 2003 New York Auto Show and hit the dealerships in the fall of 2004. In September of
2003, orders for the new and improved Pirus totalled 17,500 which is five times more then the
company target of 3000 (MSNBC). With the price of gasoline and oil ever rising, this is a great
market for Toyota to exploit.
Toyota Motor Corporation is a multinational company that produces cars,trucks, buses and robots,
with headquarters in Toyota City, Japan. Toyota is the largest carmanufacturer in Asia and second
largest producer.Toyota is one of the three major Asian car manufacturers competing U.S.producers
10

on the world market, the other two are Nissan Motors and Honda Motor. Alsothe company provides
financial services through its subsidiary, Toyota Financial Services,and works in other fields. Toyota
owns a majority stake in Daihatsu and Hino, and 8.7% of Fuji HeavyIndustries, manufacturer of
Subaru cars.In 2005, Toyota together with Daihatsu Motor Company produced 8.54 millionvehicles,
almost 500,000 less than General Motors in that year. In July 2006 Toyotaexceeded sales of Ford
cars, but the American manufacturer has regained a month later.Toyota has a significant market
share in U.S., Europe and Africa and is the market leaderin Australia.Toyota has factories all over
the world, where produces and assembles vehiclesfor local markets. The company has
manufacturing or assembly plants in Japan, USA,Australia, Canada, Indonesia, Poland, South
Africa, Turkey, United Kingdom, France,and Brazil, most recently those in Pakistan, India,
Argentina, Czech Republic, Mexico,Malaysia, Thailand, China and Venezuela.The first Toyota
vehicle built outside Japan was a Land Cruiser FJ-251 built inSo Paulo, Brazil.
The success in both Japanese market and international market is dues to itsdesire to make products
with a quality. The Japanese believe that nothing is so good that itcannot be improved, so they
constantly struggle to increase the quality of everything theydo. This attitude can be expressed by a
single word kaizen. It means continuousimprovement and is the key word which guides them
towards perfection.
A strategic marketing objective should alwaysbe in the core of an organization as The strategic
marketing objective is to build sales byexpanding the market for the product. Its not only enough
to have a marketing objective but also themaintenance and implementation of the marketing
objective yields sweet fruit for the company. Toyotastrategically moved towards product branding
from the corporate branding concept and Lexus is the outcome ofthis strategy. Toyota responded to
the micro and macro stimuli earlier than anyone else and obviously it doesntnecessarily mean that
companies only respond to the various stimuli they could create the taste for new productwhich is
pretty evidential in case of hi-tech product. The brand objective will be to create product (as well
asbrand) awareness so that customers will become familiar with generic product benefits (Jobber,
2006). Thebottom line of Toyotas promotional activity is aligned to the concept of creating needs
for its hybrid and Lexusbrand. The way of marketing has undergone a substantial change for the last
three decades. Selling product is notenough now a days; retaining customers is the prevailing
phenomenon of the 21st century marketing strategy.Successful companies have already moved from
the obsession of selling product to the philosophy of customerservice. Toyota introduced
relationship marketing to create brand loyalty for its product along with technical andfinancial
support to the customer. Toyota is proceeding with its marketing strategy.
As the Big Three American automaker companies flounder and bailouts are debated, Japanese
automaker Toyota is still moving forward. As its slogan suggests, Toyota Motor Corporation has
always been ahead of the curve. From producing eco-friendly hybrids to consistently winning
reliability awards for its cars, Toyota has a proactive nature that keeps them afloat, even during a
recession.
In 2013 the multinational corporation consisted of 333,498 employees worldwide and, as of January
2014, is the fourteenth-largest company in the world by revenue. Toyota was the largest automobile
manufacturer in 2012 by production. In July of that year, the company reported the production of its
200-millionth vehicle.Toyota is the world's first automobile manufacturer to produce more than 10
million vehicles per year. It did so in 2012 according to OICA, and in 2013 according to company
11

data. As of November 2013, Toyota was the largest listed company in Japan by market
capitalization (worth more than twice as much as 2-ranked SoftBank)and by revenue.
Vision
A vision statement for a company or organization focuses on the potential inherent in thecompany's
future, or what they intend to be. It contains references to how the company intends tomake that
future into a reality, the vision statement is simply a description of the what, meaning, what the
company intends to become.Toyota aims to be an industry leader, enriching customers lives
through innovative products that utilize advanced technologies and services.
Toyotas Global Vision
Toyota will lead the way to future of mobility, enriching lives around the world with the safestand
the most responsible ways of moving people.
Through our commitment to quality, and respect to the planet, we aim to exceed expectationsand
be rewarded with a smile.
We will meet our challenging goals by engaging the talents and passion of people, who
believethere is always a better way.
The Statement gives voice to who they are as a global enterprise, the values they embody, and the
good that they are striving to accomplish. Designed to inspire all Team Members to even greater
things, the Statement emphasizes Toyota's commitment to quality, innovation and respect for the
planet. At its heart is this signature statement: We aim to exceed expectations and be rewarded with
a smile.
One aspect of the vision is respect to the planet The process for developing an Environment
Action Process begins with the parent company in Japan, Toyota Motor Corporation (TMC). Every
five years, TMC develops a global five-year environmental action plan (EAP).
Mission
A mission statement is a statement of the purpose of a company, organization or person, its reason
for existing.The mission statement should guide the actions of the organization, spell out its overall
goal,provide a path, and guide decision-making. It provides "the framework or context within which
the company's strategies are formulated.
Toyotas Mission
To provide safe & sound journey. Toyota is developing various new technologies from the
perspective of energy saving and diversifying energy sources. Environment has been first and most
12

important issue in priorities of Toyota and working toward creating a prosperous society and clean
world.
Create vehicles that are popular with consumers.
Principles of Toyota

1. Base your management decisions on a long-term philosophy, even at the expense of shortterm goals
2. Create continuous process flow to bring problems to the surface
3. Use "pull" systems to avoid overproduction
4. Level out the workload
5. Build a culture of stopping to fix problems, to get quality right the first time
6. Standardized tasks are the foundation for continuous improvement and employee
empowerment
7. Use visual control so no problems are hidden
8. Use only reliable, thoroughly tested technology that serves your people and processes
9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to
others
10.Develop exceptional people and teams who follow your companys philosophy
13

11.Respect your extended network of partners and suppliers by challenging them and helping
them improve
12.Go and see for yourself to thoroughly understand the situation (genchi genbutsu)
13.Make decisions slowly by consensus, thoroughly considering all options; implement
decisions rapidly
14.Become a learning organization through relentless reflection and continuous improvement
(kaizen).
Corporate Strategy
Toyota's management philosophy has evolved from the company's origins and has been reflected in
the terms "Lean Manufacturing" and Just in Time Production, which it was instrumental in
developing.Toyota's managerial values and business methods are known collectively as the Toyota
Way. In April 2001 Toyota adopted the "Toyota Way 2001", an expression of values and
conductguidelines that all Toyota employees should embrace. Under the two headings
1. Respect for People
2. Continuous Improvement
Toyota summarizes its values and conduct guidelines in the following five principles.
1. Genchi Genbutsu (go and see)
2. Respect for People
3. Teamwork
4. Kaizen (continuous improvement)
5. Challenges
According to external observers, the Toyota Way has four components:
1. Long-term thinking as a basis for management decisions
2. A process for problem-solving
3. Adding value to the organization by developing its people
4. Recognizing that continuously solving root problems drives organizational learning
Core competencies
The core competence of Toyota Motor Corporation is its ability to produce
automobiles of great quality at best prices, thereby providing a value for
14

money to the customers. This core competence of quality can be attributed to

its innovative production practices. The quality aspect of Toyotas products
have revolutionized the automobiles in the past and almost all the automobile
companies had to try and better the quality of their products. It is a
cornerstone of the cost leadership strategy that the company pursues.The Toyota
brand embodies one main characteristic to consumers: quality. Consumers purchase Toyotas
because they are reliable cars that are made well and will last a long time. In the 2008 J.D. Power
and Associates Vehicle Dependability survey, Toyota and Lexus modelsearned 11 segment
awards out of a possible 19more than any other manufacturer for the third consecutive year, This
confirms Toyotas commitment to quality products. This is also shown by the fact that Toyota
ensures all of its vehicles are of the same quality no matter where they are manufactured and sold.
As a result, all of the vehicles say they are Made by Toyota, as opposed to Made in [insert
country here]. In addition to quality, Toyota is striving for recognition in innovation as well. While
Toyota is not typically known for its creativity, the organization is working to change that
perception.
The Toyota Way incorporates the Toyota Production System.Toyotas core competency is its ability
to produce high-quality vehicles at affordable prices. This ismade possible by the companys
innovative production practices known as the Toyota Production System. TPS is based on the Lean
Manufacturing concept, which includes innovative practiceslike Just-in-Time, Kaizen, and SixSigma; this will be further explained in the SWOT analysis section.Toyota has worked tirelessly to
establish this competitive advantage.
DistinctiveCompetency
Toyotas distinctive competence is its production system known as the Toyota Production System
or TPS. TPS is based on the Lean Manufacturing concept. This concept also includes innovative
practices like Just in Time, Kaizen, and Six Sigma and so on. Toyota has worked tirelessly over the
years to establish this distinctive competence. No other automobile manufacturer can do it as well
as Toyota does. This distinct competence has led to a competitive advantage that has given Toyota a
sustainable brand name and a market leader position.
Toyota is a global leader in the automobile industry, with four main geographical markets that span
the entire globe. These sectors include: the Americas, Europe, Africa, and Asia and Oceania.
Overall, Toyotas are sold in more than 170 countries throughout the world. According to an
interview with Senior Managing Director Koichi Ina, currently there are 52 bases in 27 different
countries and regionsdesign and R&D bases in seven locations overseas. The four regional
headquarters are located in North America (U.S.), Europe (Belgium), and Southeast Asia
(Singapore, Thailand). These regions are also where majority of the bases are found. This is due in
part to the purchasing power and development of these regions, making vehicles more attainable
and desirable. The United States and Europe are typically the most successful regions for selling
automobiles, but Southeast Asias rapidly growing economies have created an unprecedented
demand for vehicles. Also, Asia is a prominent market because of Toyotas roots in Japan.
Toyota differentiates on several levels form their competitors. First of all, Toyota has been very
successful in differentiating on the basis of superior design and quality. This has led to Toyota
being able to create a brand image that is very strong and one that brings to mind quality, long
15

lasting cars when a potential customer sees it. The strength of Toyotas brand image has been seen
in recent years with the recalls and problems Toyota faced in dealing with these recalls. Toyota was
able to survive these problems because they had such a long and proven track record of quality and
superior. Another, area that Toyota differentiates is in technology. Toyota was the first successful
mass produce the hybrid car on the market when it released the Prius in 2003. Being the first to get
their hybrid on the market allowed Toyota to gain a large portion of the market share in the area of
hybrid cars.
Industrial Analysis
The automotive manufacturing industry is thriving and growing at a quicker rate than ever before.
In 2015, it was predicted to grow 4.5% annually, and Toyota Motor Corporation is leading this
trend. By 2010, Toyota had opened 66 plants worldwide - 15 in Japan, and 51 others spread across
26 different nations. Their average annual growth rate has reached 8.31%, 16.44% above the prior
years results. In 2012, the company manufactured 74 different models and 9.75 million cars. In
this fast paced environment crowded with new competitors, mass production is strategically
imperative to staying successful. As North Americans recover from the tail end of a recession
certain trends have become apparent: consumers are no longer purchasing cars. Instead, they are
repairing ones they own in an effort to save money. Consumers are holding their cars, on average,
for 63.9 months, which is up 4.5 months from the previous year. Toyota takes pride in the
longevity of their vehicles. According to their web site, 80% of all Corollas in the last 20 years are
still on the road. Dealerships are suffering because of this but repair and maintenance shops are on
the rise. Toyota promotes a variety of different repairs. They only use genuine, company- made
parts. By bundling excellent service with a 5 year warranty its no wonder customer loyalty has
increased over the years. As consumers become more aware of their environmental impact the
demand for eco-friendly cars has increased. Toyota has spearheaded the hybrid movement by
designing electric and fuel-efficient cars like the Prius, Camry, and Avalon Hybrid. Due to their
dedication to innovation, "The Big Three automakers [Ford, Chrysler, and General Motors] are
required to quickly release more energy efficient vehicles to the market. Toyota is determined to
win the race by catering to this new, burgeoning market. They have partnered with one of the
leading manufacturers of electrical equipment in North America, Leviton, to produce an electric car
charging station capable of powering all hybrid Toyota vehicles. New doors have opened in the
automotive industry, forever changing what is possible.
Competitor Analysis
Toyota Motor Corporation competes in an oligopolistic auto market where manufacturers are
constantlylooking to build higher-quality cars. Due to operational costs, new firms suffer from a
high barrier toentry. This limits the number of automotive manufacturers in the market. Toyota has a
considerableinterest in improving their processes to stay competitive and restrict the number of
emerging companies.Many of todays consumers are part of the green movement and have a
positive attitude towardsenvironmental sustainability. This, in combination with skyrocketing fuel
prices, has created a demandfor smaller, fuel-efficient cars. Toyota must maintain a firm grasp on
both cost-conscious and environmentallyconscious consumers especially as other manufacturers
16

begin focusing on this section ofthe market.In developed markets, automobile demand is tied to an
increasing number of factors like material andmanufacturing costs. Over the past five years
manufacturers and consumers have been plagued withhigh gas and oil prices, encouraging the
adoption of fuel-efficient vehicles. In an era of modern technology,consumers have become better
informed about vehicles actual costs; they are less likely toaccept manufacturers large annual price
increases. Automakers like Toyota must focus on productinnovation, effective cost control and
forecasting to determine expenditure and maintain a competitiveedge.One facet of Toyotas efforts
to address the growing cost conscious market is the introduction of newelectric models. While some
automakers were more reluctant to shift production efforts to smallercars, Toyota recognized that an
upward trend in fuel prices would influence the demand for types ofvehicles. They understood that
consumers would be willing to invest more in upfront costs if it meantpotential savings down the
road.With an increase in the number of automobile financing companies in emerging markets,
Toyotasestablishment of export markets is a key success factor to help negate any downturns in
domesticmarkets. For example, Japanese carmakers offering fuel-efficient vehicles took market
share frommanufacturers of large vehicles over the past five years (Toyota 10.2% overall). Over the
next fiveyears, the emerging markets will continue to grow and vehicle sales in the developed world
will recover. Toyota has been enhancing its emerging markets business strategy to tap into these
opportunitiesand benefit from a growing consumer demand for fuel-efficient vehicles.
Costumer Analysis
Who Are Toyotas Customers?
Toyotas global expansion has given the Japanese brand a wide demographic of customers. The
company has successfully identified and capitalized on its target markets for 50 years in the
Canadian 5 marketplace. Out of all countries, the United States leads with the highest amount of
sales. Toyota caters to individuals and families of high and middle-class income looking for
affordable, safe, and innovative vehicles. Average consumers are attracted to the brands highquality, functional designs. Wealthier buyers with a keen eye for luxury, performance, and advanced
technology can also choose from a variety of models. Most recently, Toyota has extended its line of
hybrid, electric, and fuel cell eco-friendly cars to environmentally conscious consumer.

Why Toyota?
Toyotas success is due to their vast array of cars. With such a large customer base they must find a
17

perfect fit for many needs. Choices range from sport cars to family vans, and pickup trucks to
hybrids. Over the years, specific models have caught consumers attention. The 1966 Corolla
became the most popular family car with its design still being referenced in newer models today.
The 1955 Land Cruiser was built for military and police agencies but became the car for adventure
seekers in 2002 with its powerful off-road capabilities. Toyotas impeccable customer service and
relations department is the reason why consumers describe Toyota cars to be enjoyable to drive,
safe and extremely reliable. These features contribute to Toyota's ability to maintain customer trust
and earn a large %age of reinvesting customers.

SWOT Analysis
Toyota is a leading automobile company and is exporting their vehicles all around the world. Toyota
has generated heavy revenues in recent years, which have helped the company gain a dominating
position in the market. The success of Toyota is evident in the last years top brand rankings by
Business Week, where Toyota was ranked at 7. However, Toyota has shown a decline in the energy
and marketing segments, weak performance in Asia and poor performance of financial services.
Moreover, the increase in the cost of raw material can pose a serious threat to future profitability.
The stronger yen is another threat to Toyotas profit margin.

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1. Strength
The Toyota Motor Corporation was incorporated in 1937 and has many strengths being one of the
industry leaders in the automotive industry. Toyota has three major brands underneath the company
umbrella; Toyota, Lexus, and Scion. By having these three distinct brands, it lets the company reach
many sectors of the globe in a choice of vehicle for customers. They produce their vehicles and
target specific global regions, such as the Carina E for the European segment (Amherst). Toyota has
traditionally also been the leader in Total Quality Management or TQM. The belief that no process
could ever be declared perfect, and that therefore there was always room for improvement was
introduced by Toyota Sakichi (Financial Times).
The company is one of the world's best known brands with their experience which cannot be
overemphasized in the terms of manufacturing. Strength is that their product list is diverse with
wide variety of segments for the customers to choose from which could fit their lifestyle. They are
the moving assembly line pioneers which made their production very affordable as well as faster
and efficient. The company's international exposure makes the company the second largest
automaker in the world.As mentioned above, Toyotas initial purchase price may not be as
affordable as the American automakers; however it continues to succeed because customers are
purchasing a reliable, dependable product. Saving money that would be spent on repairs for other
brands makes the investment worthwhile. For that reason, Toyota held 16% of the market share,
was the number one carmaker in the world in 2007, and in 2008 has been even better. In the year
through March 2008, Toyota sold 8.9 million vehicles, an increase of 32% over five years, while its
net profits rose 53%, to $17 billion,
Toyota has some strengths such as reliable and high quality image R&D, biggest spent amongst car
manufacturers, innovative & just in time production, TQM, Lexus and other strong brands which
make it a strong competitor in the market. Toyota has huge financial capability which known as
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Toyota bank (Aghazadeh, 2003). Toyota has shown outstanding financial growth in revenue and
profitability in recent years. Toyota Motors revenues have increased at a CAGR (Compound
Annual Growth Rate) of 11.5% during 2004-2007. The companys revenues have also outperformed
the industry average of 1.8% for the same period. The revenues of the company grew at a rate of
13.8 % (Data monitor, 2007). The companys operating profit has also increased by a CAGR of 10
%. The net profit of the company also grew at a CAGR of 12 %. This impressive financial
performance has put Toyota in a dominant position (Data monitor, 2007). Toyota Motor Corporation
is showing rapid growth in the European market. The unit sales have increased by almost 20 %,
which has increased the regional revenue by 29.9 %, which brought the operating regional profit to
a massive 46 % (Data monitor, 2007). Toyota recorded robust revenue growth rates in North
America also, which is the companys second largest market (Data monitor, 2006).
Toyota also uses low cost to try and gain a competitive advantage in the automotive industry.
Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its cost
leadership strategy by adopting lean production, careful choice and control of suppliers, efficient
distribution, and low servicing costs from a quality product.(Michael E. Porter) This quote from
Michael Porter sums up how Toyota achieves this low cost strategy
2. Weakness
Toyota does have some company traits that are portrayed as a weakness in the industry. The brand
Toyota is not perceived as many to be prestigious (Amherst). Another perceived weakness is that it
is in the top five of sales but not in the top five in dividend pay-outs or stock performance (Yahoo
Finance). This may put up a red flag to investors around the globe that Toyota is not paying
dividends as frequent or as efficiently as they should to their shareholder of the company. In certain
European countries such as Belgium and Greece, diesels make up 90 % of BMW sales in part to the
tax subsidies the consumer receives (Bloomberg).
Toyotas main weaknesses are as follows:
Hierarchical organizational structure
Secrecy in organizational culture
Effects of product recalls in recent years
Toyotas global hierarchical organizational structure prevents maximum flexibility of regional
operations. Also, the companys culture of secrecy is a weakness that reduces response times in
addressing emerging problems. In addition, Toyota implemented massive product recalls starting in
2009. These recalls weaken the firm because the recall processes consume business capacity that
could be used for product distribution instead.
Toyota is a huge company and being huge has its own drawbacks. Car manufacturers at present are
producing a high number of cars so the company needs to make sure that its their car that the
consumer wants to buy. Toyotas main markets are the US and Japan, so the company is constantly
being affected by the changing economical and unstable political scenarios. Any major or minor
change in the currency exchange rates can create a reduction in profit margin for the company. The
company has to produce high number of cars to maintain its strategic advantage and operational
efficiency. That requires more investment in the shape of factories, labour, raw material and other
costs. But, at the same time, the company has to be aware of the fact that a change in market trend
can lead a company to over-produce. Toyota Motor recorded a weak-operating performance in the
20

Asian region. The revenues of the company in this region grew at a rate of 9% for the financial year
ended March 31, 2007. Though the revenues of the company in this region grew at a moderate rate,
the operating profit of the company declined significantly. In this region, the company registered an
operating profit of approximately $0.9 billion for the financial year ended March 31, 2007, a
decrease of 19% from the operating profit of approximately $1.23 billion in 2006. In addition to
this, the vehicle sales of the company in Asia region decreased by 10% to reach 789,000 units for
the financial year ended March 31, 2007, from the unit sales of 880,000 in 2006 (Data monitor,
2007). Toyota, like most others, tries to localize whenever they step into a new market. They start
assembling their products in the local region. This may reduce the cost but this may also result in
the decrement in the standard of those products. The drop in sales and profits incurred by Toyota
Motor in Asian region does not only represent the weakness of the company but also a loss of
opportunity. Toyotas financial services include loan and leasing for both the customers and dealers.
These operations recorded a decline in profitability in 2006. Operating income from Toyotas
financial services operations reached $1.3 billion in financial year 2006, a decrease of 22.4% over
the previous year. With worldwide operations, the financial services segment consumes
considerable resources of the company. Poor profitability of the financial services division is likely
to pull down the overall financial performance of the company (Data monitor, 2007).
3. Opportunities
The opportunities for the Toyota Motor Company seem to be endless. Today, Toyota has passed the
Ford Motor Company to become the world's second largest automaker in the world trailing only
GM (Forbes). Toyota has also rounded out its product line to suit the U.S. market with the
redesigned passenger trucks and SUV, but they have also hit the market hard with eco-crazed
society with the introduction of the second generation hybrid car, the Prius (Business week). The
company is also being pushed in the right direction for opportunity with the strengthening of the
Japanese Yen (Bloomberg). With the yen gaining strength and shifts in other world currency, the
operating profits dropped during the April-June quarter by fifteen % or seventy billion yen
(Bloomberg). Because of the saving the company acquired in currency shifts, Toyota has extra
money on hand to use possibly in R&D to improve on their vehicles or in several other areas
causing great opportunities for the company. Toyota has doubled its market share in Europe in the
past four years to 5.1 % due to import restrictions being dropped in the 1990's (Bloomberg). The
opening up of imports in the European market is a great opportunity for Toyota because that enables
them to put their luxury line of automobiles Lexus, up against the European BMW and Mercedes
Benz. Toyota is considering the idea of introducing a beefy three-quarter-ton pickup truck into the
U.S. Market (Big News). This model would combat the Ford F-250 and the heavy-duty Chevy
Silverado and these two pickups typically sell for more than $30,000 (Big News). If Toyota will
decide to enter the heavy-duty truck market now it could be very profitable with construction,
where the use of heavy-duty trucks are needed, booming all over the United States.
Toyota Company according to their corporate responsibility to be environment friendly, made the
opportunity to keep cleaner engine emissions. They further had a chance of create a great image in
the public with the help of environmental group works in order to keep the environment clean.
There is one great viable prospect for the company where they already started investing in solar
power. The company has a chance to regionalize and specialize their worldwide operations which
could enhance their transnational linkages. The company's existing innovations capabilities on
automobiles will make them have an opportunity to make good scope in the market other than the
21

competitors. As far as opportunities go, Toyota has two that are especially significant. As the first
company to release a hybrid, it is a step ahead of competitors. In a sense, Toyota met the needs of a
brand new market of eco-friendly consumers. With more advanced models and designs developed
every day, Toyota has the design and technology to set the bar for hybrid vehicles. The companys
other opportunity lies in another virtually untapped market: the youth. Through its marketing, credit
assistance, and product design, Scion is inspiring a grassroots revolution. No other competitor has a
product that is customizable and low cost while still being hip. It is these two markets that will
prove to be the greatest opportunities for Toyota in the future.
From a global perspective, Toyota has several opportunities within specific countries and regions.
For example, Toyota has recognized the Chinas large population and purchasing power as an asset
and as a result has set up multiple bases and regional headquarters within the country or nearby.
Also, South Americas economy has strengthened recently and demand has increased in this region
for Toyotas full-size trucks. In addition, the organization is experiencing increased demand for
Toyota full-size SUVs in the Middle East. Consequently, Toyota acknowledges these opportunities
and is acting accordingly by streamlining its exporting system.
4. Threats
Threats to the Toyota Motor Company are an everyday occurrence. A major threat to Toyota is the
Hyundai motor company. On average, Hyundai usually has thirty more horsepower in their
vehicles, and costs around 3000 dollars less than a comparably segmented Toyota vehicle
(Amherst). In the luxury line of Lexus, they are still losing ground to BMW in sedan sales and in
SUV sales (Business week). Technology increases in cars today is a major driving force in the
automobile industry, and if Toyota can't keep up with its other competitors, they could quickly lose
market share in sectors they are involved in. The latest trend in the U.S. market is the eco-friendly
vehicle that uses less gas and even more use of electronic power (MSNBC). Toyota has introduced
the Prius hybrid vehicle, but Honda also is selling a hybrid car right now and Ford, GM and
DaimlerChrlsyer have all announced plans for a soon release of their hybrid vehicles (MSNBC). If
the Toyota Company can gain market share before the other big three release their hybrid, this won't
become much of a threat, but if the Pirus does not fit consumer's needs in the hybrid sector, they
will quickly switch and try the other products on the market.
Very tight competitive rivalry is being running in the automobile industry and so Toyota faces the
same as any other organizations. The company is also affected by risks of prices change of the raw
materials like fuel, rubber, glass and steel. The economies in the Pacific, Europe and US are also
showing slowdowns. Analysis shows that these are active threats to the company financially.
Foreign competitive activities have been largely been affected by the company due to the overall
position in the industry worldwide. Threats to Toyota are mostly tied to economic stability. The
recession is affecting production and sales not only in the U.S., but has begun impacting the
company internationally as well. The weakening of the dollar has caused a ripple effect to the
weakening of the yen and other global currencies. With consumers trying to save money even on
the little things, purchasing a new car becomes less and less likely. Also, most believe Toyota will
be better off if the bailout fails. However, it is possible that major suppliers will go bankrupt if the
Big Three were to close, thus hurting foreign automakers as well. These are some of the
foreseeable threats to Toyota presently.

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International Marketing Strategy

As an international corporation and Global Fortune 500 company currently ranked fifth in the world
for revenues in 2008, there is no doubt that Toyota has seen much success in its global strategies.
The companys ability to execute its global agenda is clearly evident when examining the
distribution channels, marketing, production, and supply chain aspects of Toyota. Kaizen
(continuous improvement), and the Toyota Production System (TPS) are the essential pieces and the
heart of the companys global strategy. By using the concept of kaizen, the company is always
thinking of new strategies and methods of improvement, no matter what area the improvement can
be made. TPS on the other hand acts as a form of linkage between the critical aspects of the global
automaker as it creates and manages the supply chain, distribution channels, inventory
management, planning methods, and production capabilities. Kaizen and Toyota Production
Systems have been two successful strategies that have led Toyota to dominance in the global
automobile manufacturing market.

Toyota has grown to a large multinational corporation from where it started and expanded to
different worldwide markets and countries. It displaced GM and became the world's largest
automobile maker for the year 2008. It held the title of the most profitable automobile maker
(US$11 billion in 2006) along with increasing sales in, among other countries, the United States.
The world headquarters of Toyota are located in its home country in Toyota City, Japan. Its
subsidiary, Toyota Financial Services sells financing and participates in other lines of business.
Toyota brands include Scion and Lexus and the corporation is part of the Toyota Group. Toyota also
owns 51% of Daihatsu, and 16.7% of Fuji Heavy Industries, which manufacturesSubaru vehicles.
They also acquired 5.9% of Isuzu Motors Ltd. on November 7, 2006 and will be introducing Isuzu
diesel technology into their products.
Toyota has introduced new technologies including one of the first mass-produced hybrid gasolineelectric vehicles, of which it says it has sold 2 million globally as of 2010,Advanced Parking
Guidance System (automatic parking), a four-speed electronically controlled automatic with buttons
for power and economy shifting, and an eight-speed automatic transmission. Toyota, and Toyotaproduced Lexus and Scion automobiles, consistently rank near the top in certain quality and
23

reliability surveys, primarily J.D. Power and Consumer Reportsalthough they led in automobile
recalls for the first time in 2009.
In 2005, Toyota, combined with its half-owned subsidiary Daihatsu Motor Company, produced
8.54 million vehicles, about 500,000 fewer than the number produced by GM that year. Toyota has
a large market share in the United States, but a small market share in Europe. Its also sells vehicles
in Africa and is a market leader in Australia. Due to its Daihatsu subsidiary it has significant market
shares in several fast-growing Southeast Asian countries.
According to the 2008 Fortune Global 500, Toyota is the fifth largest company in the world. Since
the recession of 2001, it has gained market share in the United States. Toyota's market share
struggles in Europe where its Lexus brand has three tenths of one % market share, compared to
nearly two % market share as the US luxury segment leader.
In the first three months of 2007, Toyota together with its half-owned subsidiary Daihatsu reported
number one sales of 2.348 million units. Toyota's brand sales had risen 9.2% largely on demand for
Corolla and Camry sedans. The difference in performance was largely attributed to surging demand
for fuel-efficient vehicles. In November 2006, Toyota Motor Manufacturing Texas added a facility
in San Antonio.Toyota has experienced quality problems and was reprimanded by the government
in Japan for its recall practices.In 2007, Toyota maintained over 16% of the US market share and
was listed second only to GM in terms of volume.Toyota Century Royal is the official state car of
the Japanese imperial family, namely for the current Emperor of Japan.
Toyota was hit by the global financial crisis of 2008 as it was forced in December 2008 to forecast
its first annual loss in 70 years.In January 2009 it announced the closure of all of its Japanese plants
for 11 days to reduce output and stocks of unsold vehicles.
Akio Toyoda became the new president and CEO of the company on June 23, 2009 by replacing
Katsuaki Watanabe who became the new vice chairman by replacing Katsuhiro Nakagawa.
Toyota has factories in most parts of the world, manufacturing or assembling vehicles for local
markets. Toyota has manufacturing or assembly plants in Japan, Australia, India, Sri Lanka, Canada,
Indonesia, Poland, South Africa, Turkey, Colombia, the United Kingdom, the United States, France,
Brazil, Portugal, and more recently, Argentina, Czech Republic, Mexico, Malaysia, Thailand,
Pakistan, Egypt, China, Vietnam, Venezuela, the Philippines, and Russia.
Toyota's net revenue by geographical regions for the year ended March 31, 2007.
Geographic region
Japan
North America
Europe
Asia
Others

Total sales ( Yen in millions)

8,152,884
8,771,495
3,346,013
1,969,957
1,707,742

In 2002, Toyota initiated the "Innovative International Multi-purpose vehicle" project (IMV) to
optimize global manufacturing and supply systems for pickup trucks and multipurpose vehicles, and
to satisfy market demand in more than 140 countries worldwide. IMV called for diesel engines to
be made in Thailand, gasoline engines in Indonesia and manual transmissions in India and the
Philippines, for supply to the countries charged with vehicle production. For vehicle assembly,
Toyota would use plants in Thailand, Indonesia, Argentina and South Africa. These four main IMV
24

production and export bases supply Asia, Europe, Africa, Oceania, Latin America and the Middle
East with three IMV vehicles: The Toyota Hilux (Virgo), the Fortuner, and the Toyota Innova.
Strategies used by Toyota in order to get success on selected markets to developbusiness and to
impose on these markets are strategies most, created by Japanesespecialists.The strategy that
generally based both Toyota company and most Japanesecompanies is KAIZEN strategy which
means continuous improvement and the impact that ithas on the level of product quality.
KAIZEN is an integrative strategy, which means across-functional strategy that appoints the
gradual improvement, management and continuousbusiness activities and the parameters of quality,
productivity and competitiveness, withdirect involvement of all staff.The product strategy of Toyota
is based on high quality, on developing newinnovative technologies, focusing on further research,
creativity, but also hard work.Toyota is a world leader in research and development of advanced
automotivetechnologies. Toyota develops intelligent responses to the challenges of the
automotiveindustry today, while assuming responsibility for future generations.Regarding the
problem of pollutant emissions, Toyota explores simultaneously avariety of solutions for designing
less polluting vehicles as well. Toyota has committed todevelop hybrid systems as a basic factor in
manufacturing clean technology cars, combiningdifferent sources of power. It has made significant
progress in designing engines that usealternative energy sources. One of the most promising
approach is combining two differentsources of energy in a single system with the potential to use
both. This solution is known ashybrid technology and is the most promising way to achieve
Toyotas green machine.Search for innovative solutions is based on new technological concepts of
thiscompany. Unconventional ideas need a way of expression, and future technologies has tobe
tested in terms of daily life. Therefore, Toyota develops concepts such as the Fine-Nengine powered
by a fuel cell or CS&S roadster powered by a Hybrid Synergy Drivesystem.The fabrication
technology of engines is one of the most valuable property ofToyota. Toyotas performance range of
engines and advanced design reflects the highstandards set by engineers. Toyotas engines are
designed for comfort and performance,while constantly aiming to reduce emissions and optimal
fuel consumption. So, today,Toyota may offer its clients the following advantages: gasoline engines
with advancedtechnology, variable rate control valves VV-i and VVT-i, D-4D common rail
turbochargedengine - now available in D-CAT variant to equip Avensis, unique hybrid
propulsionsystem Synergy Drive.Safety is a priority for Toyota. Advanced steering systems, brakes,
suspension andtraction control help keep control of the car. Each is designed with a Toyota extreme
carein terms of safety, using advanced computer simulations and crash tests. Body and chassisare
designed to absorb energy from impact and provide a maximum occupant protection,besides SRS
(Supplementary Restraint System) airbags protection system they used.Toyota made over time
many innovations and improvement in active and passive safety.From the first active suspension
system in the world in 1991, to the marketing of StabilityControl System Vehicle in 1995, and to the
first curtain airbag launched in 1998, Toyotahas aimed to improve the security and technology
benefits that it offers to its clients.It can be said that Toyotas main strategy is the total control of the
quality usingthe zero defects, continuous improvement of its products.Toyota makes independent
studies on consumer needs, getting the vote ofconfidence on their part. Also, this is reinforced by
the exceptional results of Toyotavehicles in Euro NCAP safety tests. Consumers trust Toyota cars
and feel safe in theirwheels. This trust is the result of the highest standards of quality which Toyota
designsand produces its cars.The Japanese have turned their attention to markets with significant
growthpotential. In Europe car manufacturers have invested substantial amounts to buildproduction
25

plants, research centres and design workshops.Toyota designers from three continents are exploring
ideas, visions and desires inorder to design advanced machines and new technologies bringing more
quality of life.Toyota opened in 1954 in Tokyo, Japan, Head Office Technical Centre, whichwas the
centre of design activities, planning, designing, and production of prototypes andevaluation of
vehicles. It was responsible for all fields, including planning, designing andevaluating vehicles. In
addition, the centre is also in charge of security technologies,energy conservation and
environmental protection.In 1973, in Newport Beach, California Toyota opened the design centre
CaltyDesign Research, Inc... Toyota Europe Design Development is opened in 2000 and is located
in Nice,France. The company created the European Laboratory for Design ED for a
betterunderstanding of local influences and preferences of current and potential clients. Here,the
team has developed successful models Yaris, Corolla, Corolla Verso, Avensis andLand Cruiser.The
company experts were quickly realize that local production of vehicles andexporting them to
different countries is not as profitable business as their installation evenin areas of marketing.Very
rapid conquest of significant market share in the EU is a direct result of rapidadaptation to the
specifics of each area and complying with regulations without trying toavoid or modify them (a
characteristic of U.S. firms).Also, a major component in Toyotas strategy is to build more research
and designcentres in the proximity of production facilities. These bring specific items of the
areasregarding the design and amenities. Unexpected success of the Japanese led to theexportation
of vehicles produced in Europe to other markets of the world.This is the strategy that Toyota has
adopted to penetrate foreign marketsworldwide. Think global, act local is the slogan that guides
the company on the globalmarket. Toyota has adopted the strategy of direct investments on the
growing and stablemarkets, as we have demonstrated, and it fully managed.
Toyota European Market
Japanese investors have turned to Europe, a market which they consider vital not only for their
products, but also ambitions to become leading global player. Toyota Motor, the second global car
manufacturer, was the one who initiated this trend. The auto manufactures has eight factories in the
old continent, in UK, France, Poland, Turkey and the Czech Republic, with a total of 55,000
employees, including a distribution network and a research and a development centre in Zavetem,
Belgium. Any location it would have operations, the company brings annual profits of million Euros
from contracts made. It brings an important chain in research and development related to design and
safety standards. In Europe in 2003, the Japanese company under three brands owned Toyota,
Daihatsu and Hino, recorded a 4.4% market share. In 2004 there were 17 production units of
Japanese automotive facilities in the European Union, they produce 1.3 million vehicles and 14
research and development centres. It is estimated that these investments have created 200,000 new
jobs. The European market is too important to be ignored, said the Japaneses, it is still a strong
market that rivals many companies for and it has a unique industrial base. Japanese companies have
started a series of investments in Russia, where domestic market is growing. In June 2005, Toyota
began building a plant near St. Petersburg that will produce, starting with the 2007 Camry models.
While the UK benefits from about half of total Japanese investment, Japanese companies begin to
move eastward manufacturing facilities to take advantage of lower wage costs and to be closer by
the more flexible markets of new EUs members, that some of them will adopt the euro in a few
years. They want to consolidate their positions on the stable, secure and growing markets, but
competitive, too. The European market is one of them. On the European market Toyota Motor
Corporation recorded increases in sales from year to year. Its success owes to adapt its supply to the
26

needs and requirements of the Europeans, based on total quality strategy, innovation and continuous
competitive spirit.
Toyota US Market
Business activities in U.S. of Japanese automotive and components companies are highly profitable.
If in 1980 the Asian brands cars were imported 100%, in 1993, the number of factories located on
American soil was 11. Descent into force of the Japanese producers in the U.S. is seen as a second
Pearl Harbour. Japanese brand market share increased from 15.3% in 1999 to 20.6% in 2004 and
the trend is upward, considering that in 2006 their number of plants is 23. As in Europe, the
Japanese have invested heavily in U.S. production sites. GM, Ford and DaimlerChrysler companies
have been overcome by the Japanese, especially because of their high adaptability, but also of the
lack of a culture of domestic product among American citizens. In 2007, Toyota surpassed Ford in
U.S. sales, standing on second place, after GM. At the end of 2007 Toyota manages to become a
world leader in car sales surpassing giant General Motors. Japanese manufacturer has managed to
manufacture and sell 9,51 million units compared with 9,26 million units sold by GM. GM leader of
the auto sector for 8 decades, had to settle, this time, with the second position after Toyota. The
reason that Toyota becomes the world leader was undeniable the interest that US show to the fuelefficient vehicles which bear the unmistakable signature of Japanese. In 2008, Toyota sold more
vehicles than GM, 4.72 million vehicles for the Japanese group compared with 4.67 million
vehicles of GM, the leader of the American auto industry over the past 76 years. For 2009 Toyota
proposed to sell 10.4 million vehicles, a figure that would set a new record in the automotive
industry, the former dating from 1978 when GM sold 9.55 million vehicles in the whole world.
However, global economic crisis has hit everyone, including Toyota. The race between GM and
Toyota is not only about the number of vehicles sold. In terms of profitability, GM is significantly
behind those of Toyota, which also invests heavily in research and development of new models. On
costs and profits of the auto industry, for each vehicle produced in North America in 2006, GM
posted a profit of $ 2,123 less than Toyota did. Japanese car manufacturer is the most profitable car
manufacturer in the world, its profit per vehicle increasing from U.S. $ 1.175 in 2005 to $ 1,977 in
2006. Although the European market is steady for Toyota Company, the market where they sell
most Toyota cars remains the North American.
Toyota Australian Market
On the Australian market, in early 2010, the Toyota company has started production of the Toyota
Camry Hybrid car. This is a model powered by electricity and gas and it will be produced around
10.000 units annually at the Altoona plant in south-eastern Australia. Toyota became the first
manufacturer which makes mass production of cars powered by a hybrid system, starting with the
Prius more than ten years ago. Toyota is counting on increasing demand for such vehicles with
hybrid propulsion in terms of increasing fuel prices and the sharp rise in world temperatures.
Toyota Other Market
Toyota made another step towards conquering global automotive market. It expands on the markets
of Russia and China, the main weapons are low-cost cars. Toyotas plan is to build three new
factories that produce over 450,000 units annually in order to meet market demand in India and
China. Till 2010 Japanese giant plans to hold 15% of the global auto market. In 2010 Toyota plans
to sell about 73 million vehicles, up 12% of sales in the last five years. Japan plans envisage the
expansion on the emerging markets like Brazil, Russia, India and China. Toyota is counting on the
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elasticity of these markets, which, in their opinion, is the key to success for increasing their sales
significantly. The main objective is the Chinese market. China currently registered the highest rate
of economic growth and the automotive segment is a very large expansion, which makes Toyota to
hurry to take over the control of this market. The most spectacular evolution of the sales took place
in China, the most dynamic region for Toyota in 2006. In 2008 Toyota sold in China 62% more cars
than in 2006 (in 2006 the growth rate for this region was 68%). Middle East ranked second place
among the regions with the largest increasing sales of Toyota cars. Toyota Motor Corp. will invest
68 billion yen (680 million dollars) in the second production plant in India. The new plant will
produce the Corolla model. At the same location will be produced another new model that will be
launched in 2010. It will cost around 8000 dollars and the company says that it is aimed at low-cost
segment.
Market Segmentation Strategy
How do Toyota Choose its Customers Target Market?
The segmentation, targeting and positioning of Toyota cars is based on the "care" of its users and it
can be clearly seen in its variety of offers and product attributes.
Currently Toyota is focusing on two segmentations:

Demographic Segmentation
Psychographic Segmentation

In the first segment of Demographic, Toyota has targeted the family size and in this segment people
of Upper Middle High Income group is kept in view by Toyota. Land Cruiser, Parado, Camry is
some major cars of this segment which are designed for those who have the willpower and buying
power to purchase these cars.
In the second segment of Psychographic, Toyota has targeted the family size and in this segment
people of the high class, a high income group who have sporty attitude, is kept in view by Toyota
such as Toyota Altis Sport model and Toyota Fortuner. These sports cars that helps in improving and
exhilarating their sense and passion for sports. SUV , MUV and Sedan are its examples.
Positioning Strategy
Toyotas uses both differentiation and low cost as generic strategies to try and gain a competitive
advantage over their competitors in the automotive industry. The market scope that Toyota uses is a
broad one that encompasses nearly every type of customer that is in the market to purchase an
automobile. Toyota is able to target such a large market because they have something for everyone.
Toyota has four wheel drive trucks and SUVs for the outdoor types or those who live in areas that
face severe weather conditions, hybrid models like the Prius for the eco-friendly customers that are
interested in saving the environment, along with the standard cars for general, everyday use.
Additionally, Toyota provides vehicles for all price ranges. From the low price Toyota Corolla line
of cars to the high priced luxury line of cars and SUVs with Lexus, Toyota has something for
everyone. Figure demonstrates brand positioning from the perspective of a consumer looking for
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high quality; fuel-efficient vehicles (please note that these positions vary depending on the
consumer). Toyota will increase sales by positioning their low cost, hi-tech, energy saving cars near
the green circle on this perceptual map. By highlighting their most recent technological innovations
as a point of difference, Toyota can overthrow the Honda Mobilio, their rival model.

Differentiation
Toyota differentiates on several levels form their competitors. First of all, Toyota has been very
successful in differentiating on the basis of superior design and quality. This has led to Toyota
being able to create a brand image that is very strong and one that brings to mind quality, long
lasting cars when a potential customer sees it. The strength of Toyotas brand image has been seen
in recent years with the recalls and problems Toyota faced in dealing with these recalls. Toyota was
able to survive these problems because they had such a long and proven track record of quality and
superior. Another, area that Toyota differentiates is in technology. Toyota was the first successful
mass produce the hybrid car on the market when it released the Prius in 2003. Being the first to get
their hybrid on the market allowed Toyota to gain a large portion of the market share in the area of
hybrid cars.
Toyotas Marketing Mix Strategy
Toyotas marketing mix involves a diverse set of strategies for its product line-up, place and
distribution, and promotion. The company uses different pricing strategies. 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.
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Product Strategy
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:

Toyota Automobiles
Lexus Automobiles
Welcab Series
Marine Products
Spare Parts and Accessories
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.
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:

Market-Oriented Pricing
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 valuebased 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
Place / Distribution Strategy:
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:
Dealerships
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.
The distribution channels of Toyota break down into two logistical concepts:

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Regional Bases
Dock-based Operation

As stated before, Toyota is based in Japan, but the company has established bases throughout the
world. Within these bases are multiple plants and distribution centres that are better able to allocate
products within the regional location. For example, Toyota North America has five major plants in
the continent, all of which reside in the U.S. These locations include Huntsville, Alabama;
Georgetown, Kentucky; Princeton, Indiana; San Antonio, Texas; Buffalo, West Virginia; and Blue
Springs, Mississippi. In having multiple regional headquarters, the company is able to localize and
better meet the wants and needs of Toyotas customers in many different countries. The second form
of distribution channels is the dock-based approach. With the dock-based approach, Toyota uses
port facilities to acquire and contain cars that have been made abroad. Inspections and quality
control procedures are performed on site at the port locations. Often times other Toyota vehicles
that have been previously made within the regional headquarters will be brought to the port facility
to join the imported cars before they are redistributed to the regional dealers.
There are both positive and negative viewpoints on this particular form of distribution. The docks
are no longer just a way of passage for the vehicles, but rather an extension of the factory. By
having regional headquarters and operating plants in numerous locations, specifically within the
country the cars are imported to, would decrease the amount of dock-based operations to that
particular country. However, Toyota still accepts and embraces the dock-based approach as a
successful strategy. According to Maritime Administration statistics, automobiles accounted for
nearly $67 billion dollars in imports and exports handled in the U.S. in 1999. Clearly, dock-based
operations are still a big piece to Toyotas distribution channels processes.
Promotion Strategy:
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:
Personal Selling
Advertising
Public Relations
Sales Promotion
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 Together Green 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.
Value Chain Analysis

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Porter Identifies five primary activities that add value to the final output of the company, the
following is an analysis of Toyotas Value chain:
1. Inbound Logistics
This is where goods are received from a company's suppliers and stored until they are needed on the
production/assembly line. When it comes to obtaining raw materials, Toyota doesnt process their
own, or create their own, they use a third party. They purchase their raw material from all around
the world and in order to maximize their availability of raw material, they maintain good
relationship with their suppliers. Toyota use JIT (Just in Time) approach for handling of raw
material.
2. Operation
This is where goods are manufactured or assembled. Toyota uses various systems to be efficient and
effective which is the Toyota Production System (TPS). The system includes JIT (Just-in-Time)
Management that regulates the production process in accordance with customers' requirements and
Jidoku system that automatically stops the production process if any defects and other operational
problems appear. Operational Stability is also a part of TPS and consists of: Heijunka concept - the
uniform distribution of work at any places of production process; Standard Work - organizing the
work in the right order and with its description; TPM (Total Productive Maintenance) the overall
check-up of all equipment that is involved in the production of the products; and Value Chain which
is a series of value-added processes. (Toyota Production System)
3. Outbound Logistics
Where goods are now finished, and they need to be sent along the supply chain to wholesalers,
retailers or the final consumer. The company makes sure that the products are delivered in the right
place and at the right time. The cars are directly sent to the dealers or if distributed overseas, Toyota
uses containers, waterway transportation. They also manage their own Showrooms in different
countries.
4. Marketing & Sales
Where the company's marketing department allocates the finished goods i.e. new products to the
targeted group of customers. This area focuses strongly upon marketing communications and the
promotions mix. Toyota Production System also makes it possible for the company to use indirect
distribution channels, dealers and distributors.
5. Service
This includes all areas of service such as final checking, after-sales service, complaints handling,
training and so on. Toyota always tries to meet the customers needs and requirement and try to
continuously improve their services. The main factor for Toyota Company in providing services is
their reliability. Services are provided by qualified personnel of the company. As a result, trained
workers, good service and reliable products become a guarantor of Toyotas success among its
competitors and help to meet customers expectations. This activity can be reflected from their wellknown philosophy Customers First.

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Conclusion
Today Toyota is the largest carmaker in the world with about 9 million car sold around the world.
The backbone of their success being their sharp well thought and excellently implemented
strategies. It yielded excellent result over the years it brought them to the No. 1 position and if it
maintained, there is no doubt about the fact that theyll maintain their position for years to come.
Taking advantage of the opportunities of a global market, Toyota has adopted a global strategy, but
considering the characteristics of markets in which it acted.
The slogan think global, act local implies the need to think market and business in global terms,
and in the same time to achieve adapting to the local consumers demands.Toyotas success both on
the Japanese market and international market is due toits desire to make products with high quality,
always perfecting and innovating automotivetechnologies, creating new models, showing concern
for consumption, but also for theenvironment surroundings, focusing on the consumer. Thus, Toyota
has committed todevelop hybrid systems as a basic factor of the eco-car technology. The company
set updesign labs in Europe and USA for a better understanding of local influences andpreferences
of current and potential clients, showing care for their needs.Toyotas global strategies are
considering entering the international growingmarket, stable, slowly and surely (the European
market case).Also, Toyota took advantage of the opportunities offered by emerging countrieswith
growing economies, lower wage costs and more flexible markets of new EUsmember
countries.Japan plans envisage expansion in emerging markets like Brazil, Russia, India andChina.
The main weapon Toyota uses in order to conquer these markets is the low-cost cars.Even if global
economic crisis has affected the entire automobile industry,affecting Toyota too, the company
remains on the top of the most successfulmultinationals companies of the auto industry .And even
though, lately, Toyota cars registered some manufacturing problems andthey had to be withdrawn
from the market, the company management has remained in itsoriginal principles, namely, honesty
and loyalty to customer, care for his safety, asking forpublic apologies for shortcomings of its cars
lately and promising more attention for thequality and safety of future products of their
company.Adopting a global strategy based on the product policy, research and continuousquality
improvement, technological innovation, but also respect for consumers around theworld, they can
say without any doubt that Toyota Motors Company conquered the whole
world.
Toyota Industries has promoted diversification through continuous innovation all through its life
and expanded the scope of its business domains to include textile machinery, automobiles(vehicles,
engines, car air-conditioning compressors, etc.), and materials handling equipment, electronics, and
logistics solutions. All these Expansion Strategies adopted by Toyota has resulted in making Toyota
one of the largest Conglomerates.
Toyota Motors in itself has 522 Subsidiaries some of which are individually present in Forbes
Fortune 500 list.

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Today Toyota is the largest carmaker in the world leading General motors and the top selling
automaker. The Japanese company has sold 9.7million cars and trucks in 2012 leaving GM in
second place with 9.29million cars.
The backbone of their success being their sharp, well thought out and excellently implemented
strategies. It yielded excellent result over the years it brought them to the No. 1 position and if
maintained, there is no doubt about the fact that theyll maintain their position for years to come.

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References
http://www.toyotafinancial.com
http://www.toyota.com
http://www.toyota-industries.com/corporateinfo/corpdata/
http://www.toyoland.com/history.html
http://www.toyota-global.com/investors/ir
http://www.marketingweek.co.uk/toyota-and-ford-collaborate-to-build-hybridcars/3029482.article
http://www.toyota-global.com/investors/ir_library/annual/pdf/2012/feature/
http://toyota.eu/SiteCollectionDocuments/Sustainability
%20report/2009_sustainability_report.pdf
http://www.iiste.org/journals/

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