INTRODUCTION

1.1. OVERVIEW - INDIAN AUTOMOBILE INDUSTRY

Over a period of more than two decades the Indian Automobile industry has been driving
its own growth through phases. The entry of Suzuki Corporation in Indian passenger car
manufacturing is often pointed as the first sign of India turning to a market economy.
Since then the automobile sector witnessed rapid growth year after year. By late-90's the
industry reached self reliance in engine and component manufacturing from the status of
large scale importer.

With comparatively higher rate of economic growth rate index against that of great global
powers, India has become a hub of domestic and exports business. The automobile sector
has been contributing its share to the shining economic performance of India in the recent
years.

With the Indian middle class earning higher per capita income, more people are ready to
own private vehicles including cars and two-wheelers. Product movements and manned
services have boosted in the sales of medium and sized commercial vehicles for
passenger and goods transport. Side by side with fresh vehicle sales growth, the
automotive components sector has witnessed big growth. The domestic auto components
consumption has crossed rupees 9000 crores and an export of one half size of this figure.

Overview Of Automobile Industry

The Indian automobile industry is going through a technological change where each firm
is engaged in changing its processes and technologies to sustain the competitive
advantage and provide customers with the optimized products and services. Starting from
the two wheelers, trucks, and tractors to the multi utility vehicles, commercial vehicles
and the luxury vehicles, the Indian automobile industry has achieved tremendous amount
of success in the recent years.

1
As per Society of Indian Automobile Manufacturers (SIAM) the market share of each
segment of the industry is as follows:.

The market shares of the segments of the automobile industry

The automobile industry had a growth of 15.4 % during April-January 2007, with the
average annual growth of 10-15% over the last decade or so. With the incremental
investment of $35-40 billion, the growth is expected to double in the next 10 years.

Consistent growth and dedication have made the Indian automobile industry the second-
largest tractor and two-wheeler manufacturer in the world. It is also the fifth-largest
commercial vehicle manufacturer in the world. The Indian automobile market is among
the largest in Asia.

The key players like Hindustan Motors, Maruti Udyog, Fiat India Private Ltd, Tata
Motors, Bajaj Motors, Hero Motors, Ashok Leyland, Mahindra & Mahindra have been

2
dominating the vehicle industry. A few of the foreign players like Toyota Kirloskar
Motor Ltd., Skoda India Private Ltd., Honda Siel Cars India Ltd. have also entered the
market and have catered to the customers’ needs to a large extent.

Not only the Indian companies but also the international car manufacturing companies
are focusing on compact cars to be delivered in the Indian market at a much smaller
price. Moreover, the automobile companies are coming up with financial schemes such as
easy EMI repayment systems to boost sales.

There have been exhibitions like Auto-expo at Pragati Maidan, New Delhi to share the
technological advancements. Besides, there are many new projects coming up in the
automobile industry leading to the growth of the sector.

The Government of India has liberalized the foreign exchange and equity regulations and
has also reduced the tariff on imports, contributing significantly to the growth of the
sector. Having firmly established its presence in the domestic markets, the Indian
automobile sector is now penetrating the international arena. Vehicle exports from India
are at their highest levels. The leaders of the Indian automobile sector, such as Tata
Motors, Maruti and Mahindra and Mahindra are leading the exports to Europe, Middle
East and African and Asian markets.

The Ministry of Heavy Industries has released the Automotive Plan 2006-2016, with the
motive of making India the most popular manufacturing hub for automobiles and its
components in Asia. The plan focuses on the removal of all the bottlenecks that are
inhibiting its growth in the domestic as well as international arena.

3
Top Ten Players in Indian Automobile Sector

The domestic players as well as the foreign players dominate the Indian automobile
sector. The key players contributing to the growth of the sector are discussed below.

Top Ten Players in Indian Automobile Sector

• Maruti Suzuki India Hero Motors Limited

• Hero Motors Limited
• Tata Group
• Bajaj Auto Limited
• Mahindra Group
• Ashok Leyland
• Yamaha Motor India
• Hyundai Motors India Limited
• Toyota Kirloskar Motor Private Limited
• Honda Siel Cars India Limited

4
1.2. COMPANY PROFILE

The story of Toyota Motor Corporation began in September 1933 when Toyota

Automatic Loom created a new division devoted to the production of automobiles under

the direction of the founder's son, Kiichiro Toyota. Soon thereafter, the division produced

its first Type A Engine in 1934, which was used in the first Model A1 passenger car in
May 1935 and the G1 truck in August 1935. Production of the Model AA passenger car
started in 1936.

Although the Toyota Group is most well known today for its cars, it is still in the textile
business and still makes automatic looms (fully computerized, of course), and electric
sewing machines which are available worldwide.

Toyota Motor Co. was established as an independent company in 1937. Although the
founding family name is Toyoda, the company name was changed to:

 Signify the separation of the founders' work life from home life;

 Simplify the pronunciation, and

 Give the company an auspicious beginning. Toyota is considered luckier than

Toyoda in Japan, where eight is regarded as a lucky number, and eight is the
number of strokes it takes to write Toyota in Katakana.

5
During the Pacific War the company was dedicated to truck production for the Imperial
Army. Because of severe shortages in Japan, military trucks were kept as simple as
possible. For example, the trucks had only one headlight on the center of the hood.

Commercial passenger car production started in 1947 with the model SA. In 1950 a
separate sales company Toyota Motor Sales Co. was established (which lasted until July
1982). In April 1956 the Toyota dealer chain was established.

Replica of the Toyota Model AA, the first production model of Toyota in 1936

6
ORGANISTION STUCTURE OF THE COMPANY

HEADQUARTERS: TOYOTA CITY, JAPAN

ASSEMBLY PLANTS OVER THE WORLD

Toyota has factories all over the world, manufacturing or assembling vehicles for local
markets, including its most popular model, the Corolla.

Toyota has manufacturing or assembly plants in the United States, Australia, Canada,
Indonesia, Poland, South Africa, Turkey, the United Kingdom, France, Brazil, and more
recently India, Argentina and Czech Republic.

Toyota also builds and sells cars in China in a joint venture with Tianjin Xiali. Toyota
New Zealand assembled vehicles until 1998, when it switched to importing cars from
Japan and Australia. Cars from these plants are often exported to other countries.

7
Toyota Car Model:

Innova

Camry

Avalon

Matrix

Corolla

8
 Prius

TRUCKS:

Tacoma

Tundra

SPORTS UTILITY VEHICLES( SUVs):

4runner

9
 Land cruiser

OVERVIEW

In 2006, Toyota was engaged in a variety of projects designed to solidify its foundations
while continuing to grow.

On the product front, Lexus launched its new flagship model, the LS, and the new global
Camry went on sale. In Japan, a new Corolla range was introduced, emphasizing the
importance of this best-selling car.

In manufacturing, several new projects were started around the world. In May,
manufacture of the Camry began in Guangzhou, China, while in the United States, the
Kentucky plant, which in
October celebrated 20 years of production, started manufacturing the first Toyota hybrid
vehicle to be made in North America, the Camry Hybrid. In November, the Texas plant
began producing the new Tundra truck, a key vehicle in Toyota’s North American lineup.
In Japan, Toyota Motor Kyushu, Inc. began full-scale operations at its engine factory,
while Toyota Motor Tohoku Co., Ltd. increased its manufacturing capacity.

In human resources development, following the establishment of the Asia Pacific Global
Production Center in Thailand in August 2005, Toyota established the North American
Production Center in the U.S. in February, and the European Global Production Center in
the United Kingdom in March. Established as branches of the Global Production Center
in Japan, these were created to spread Toyota’s manufacturing knowledge and skills
throughout the world in pace with the rapid growth of Toyota’s overseas manufacturing.
The centers educate trainers for local manufacturing plants in all regions, with trainees
passing on what they learn to team members on their return to their plants.

10
In R&D, Toyota focused its efforts on three key areas: environment, safety and energy. It
made a special effort in the area of the environment by expanding its lineup of hybrid
vehicles, and has worked on R&D relating to plug-in hybrid. In addition, as part of
Toyota’s efforts to respond to the diversification of energy, in 2007 Toyota introduced a
flex fuel vehicle* in the Brazilian market that will run on 100% bio-ethanol fuel. From
this point on, based on the philosophy of providing “the right car, in the right place, at the
right time,” and in accordance with the infrastructure and customer needs of each region,
Toyota will continue to promote efforts to develop environmentally friendly technology
and vehicles.

GUIDING PRINCIPLES

 Honor the language and spirit of the law of every nation and undertake open and
fair corporate activities to be a good corporate citizen of the world.

 Respect the culture and customs of every nation and contribute to economic and
social development through corporate activities in the communities.

 Dedicate ourselves to providing clean and safe products and to enhancing the
quality of life everywhere through all our activities.

 Create and develop advanced technologies and provide outstanding products and
services that fulfill the needs of customers worldwide.

 Foster a corporate culture that enhances individual creativity and teamwork value,
while honoring mutual trust and respect between labor and management.

 Pursue growth in harmony with the global community through innovative

management.

 Work with business partners in research and creation to achieve stable, long-term
growth and mutual benefits, while keeping ourselves open to new partnerships.

PERCEPTS

 Be contributive to the development and welfare of the country by working

together, regardless of position, in faithfully fulfilling your duties.

11
  Be at the vanguard of the times through endless creativity, inquisitiveness and
pursuit of improvement.
 Be practical and avoid frivolity.
 Be kind and generous; strive to create a warm, homelike atmosphere.

Be reverent, and show gratitude for things great and small in thought and deed

MANAGERIAL INFORMATION

Executives
Board of Directors

NAME TITLE
Fujio Cho* Chairman
Katsuhiro Nakagawa Vice Chairman
Katsuaki Watanabe President
Tokuichi Uranishi Executive Vice President
Kazuo Okamoto Executive Vice President
Takeshi Uchiyamada Executive Vice President
Akio Toyoda Executive Vice President
Takeshi Suzuki Senior Managing Director
Hiroshi Takada Senior Managing Director
Shinichi Sasaki Senior Managing Director
Shin Kanada Senior Managing Director
Shoichiro Toyoda Honorary Chairman
Hiroshi Okuda** Senior Advisor, Member of the Board
*Promoted, **Changed

Organizational Changes

1) Domestic Sales Operations Group and Overseas Planning Operations Group

12
The Domestic Sales Operations Group and the Overseas Planning Operations
Group have been reorganized.
Sales and planning functions, which were divided by region, i.e. domestic and
overseas, have been integrated.

Purpose
As a global business management function of Toyota's global headquarters, to
allow close coordination between TMC and various regions, including Japan, and
to implement the "most-suitable growth strategy from a global perspective"
though product, price and supply-and-demand strategies

2) Government & Public Affairs Group / General Administration & Human

Resources Group

The transfer of some divisions/departments of the General Administration &

Human Resources Group to the Government & Public Affairs Group, have taken
place as follows:

Before Changes
• General Administration & Human Resources Group
• Public Affairs Administration Dept.
• Tokyo Secretarial Div.
• Tokyo General Administration Div.

After Changes
• Government & Public Affairs Group
• Public Affairs Administration Dept. (transfer)
• Tokyo Secretarial Div. (transfer)
• Tokyo General Administration Div. (transfer)

13
Purpose
To optimize the structural organization and distribution of human resources by
consolidating the divisions and departments relevant to government & public
affairs

3) Production Control & Logistics Group

Before Change
• Production Control & Logistics Group

After Change
• Strategic Production Planning Group
(name changed)

Purpose
To create a name that reflects a strengthened stance toward planning that
considers the actual situation of global production activities

4) Housing Group (Housing Company)

The name of the Housing Group (Housing Company) has changed.

Before Change
• Housing Group (Housing Company)

After Change
• Housing Group (name changed)

Purpose
To reflect the achievement of the original objective to reinforce operational
structures through the introduction of the "company" system

5) Divisions/departments not belonging to a group; Asia, Oceania & Middle East

Operations Group; China Operations Group

The transfer of some divisions/departments to relevant groups.

Before Changes
• Divisions/departments not belonging to a Group
• Taiwan Office
• China Office
After Changes
• Asia, Oceania & Middle East Operations Group
• Taiwan Office (transfer)
• China Office (transfer)

14
Purpose
To clarify the chain of command and to optimize the structural organization and
distribution of human resources

As a result of the above changes, the number of divisions has increased from
228 to 229.
GROWTH

Lasting growth for Toyota will depend on aligning our interests with the larger interests
of customers and the community. We must be a company where people think seriously
about the role and responsibility of their company in the world.

Our economic and industrial contribution in each region grows, for example, as we
globalize our operations. Another way to align our interests with the larger interests of
the community is through technology.

By the end of 1997, we will introduce the world's first new-energy transport that is
commercially competitive with conventional automobiles. That is when we will put a
hybrid-electric passenger car onto the market in Japan. Our hybrid-electric car will have a
gasoline engine to generate electricity or provide supplementary power to the wheels. It is
twice as fuel-efficient as conventionally powered vehicles of comparable size and
performance. Equally important, the value of its potential fuel savings could prove
greater than its cost premium over conventional vehicles. So, it actually could save
money for car owners.

Survival and growth in our industry will hinge on developing technologies for reducing
environmental impact of our products and operations, as well as improving vehicular
safety. Photos and text on the following pages introduce some of the technologies we are
developing to position Toyota as an environmental leader.

15
PRIORITIES OF TOYOTA IN GROWTH STRATEGY

 Fortifying our product line

 Asserting a competitive edge in technology
 Accelerating globalization
 Reclaiming market share in Japan
 Cultivating demand in new business sectors

Measures for asserting a competitive edge in technology have centered on environmental

themes. We have introduced or demonstrated new power train technologies in the past
year that will make Toyotas run cleaner and greener than ever. Those technologies
include...

 A direct-injection system that makes gasoline engines more efficient

 Hybrid-electric systems that double fuel efficiency and reduce noxious
emissions
 Pure electric, "zero emission" vehicles that alleviate urban pollution
 Fuel-cell systems that could transform the automobile in the 21st century.

MARKET SHARE OF TOYOTA

Toyota Motor Corp. grabbed more U.S. retail market share than Ford Motor Co. in early
November and it was less than one share point behind General Motors Corp.,
Toyota, Japan's largest automaker, had a 15.4 percent U.S. retail market share a year
earlier.
Toyota plans to enter small car segment in India

16
World’s second largest automaker wants to get offensive in the Indian domestic auto
market. Toyota is very much interested in launching a small car here in the segment
currently dominated by Maruti Suzuki and Hyundai. Tata also has a decent presence in
the market with their Indica range of diesel vehicles.
Toyota is at the moment carrying out a feasibility study for launching such a vehicle in
the domestic market where it has models like the Innova and Camry amongst others.
They have had an incredible success with their stopped Qualis model and are selling
Toyota Innova in large numbers. T Ino, director (marketing), Toyota Kirloskar Motor Pvt
Limited has expressed that the Indian auto market is a huge one and has the capacity to
involve more players in the small car segment.
Toyota has a variety of interesting models in its global lineup, which it can consider to
launch in the Indian market. Some of these are Vios, Platz, and Passo. The company also
expects to break even here in India this year with all the accumulated losses were
expected to be wiped out during 2005. They also plan to invest around Rs 130 crores
during the current year to enhance efficiency.

PRODUCTS (GLOBAL):

1. AVALON
2. CAMRY
3. CAMRY SALORA
4. COROLLA ALTIS
5. MATRIX
6. PRIUS
7. 4RUNNER
8. HIGH RUNNER
9. LAND CRUISER
10. SEQUOIA
11. SIENNA

17
PRICE:-

As far as pricing strategy of Toyota is concerned. They are focusing on the very segment
of the market not only particular segment. Basically they are focusing on official and
business class people

CAR MODELS EX- SHOWROOM (MUMBAI)

(INDIA) AMOUNT IN INR.

INNOVA 8,01,738

COROLLA ALTIS 11,31,900

CAMRY 22,84,800

PRADO 42,27,300

Table 1.1

18
FUTURE PLANS

India's car population may be growing but the growth is mainly concentrated in the small
car sector, and not without reason. With increasing interest rates making buying cars
costlier and the government slapping new duties on larger vehicles in addition to the
existing favorable tax regime for smaller cars, even premium players are wading into the
small-car scene.

Indian passenger car sales rose by 11.79 per cent between April 2007 and March 2008 to
1.2 million units. Competition in the small car segment is set to increase in 2009, with
planned launches by Maruti Suzuki (A-Star and Splash), Honda (Jazz) and as yet
unnamed models from Ford, GM and Volkswagen.

Japanese carmaker Toyota, all set to surpass General Motors as the world's largest, is the
latest entrant when it made its intentions clear on the occasion of the laying of the
foundation stone for its second factory in India.

The decade-old Indian joint venture of the Japanese automaker, Toyota Kirloskar, is
building its second plant at Bidadi, about 40 kilometers from India's IT hub of Bangalore,
with an upfront investment of Rs14,000 crore ($329 million) to manufacture a range of
passenger cars and multi-utility vehicles. Toyota is the majority partner with an 89-per
cent stake with Kirloskar owning the rest.

Karnataka chief minister B S Yeddyurappa unveiled the foundation stone for the new
plant that will have a test track and additional space for suppliers and other vendors. The
ceremony was attended by Toyota senior managing director Akira Okabe, chairman
Ryoichi Sasaki, vice-chairman Vikram Kirloskar and managing director Hiroshi
Nakagawa.

19
The modular plant, to be commissioned by 2010, will have an installed capacity of
100,000 units annually and will employ about 2,400 people. Top officials confirmed that
the company will soon be introducing its newly designed compact car in the Indian
market.

The factory will be ready by mid-2010 and we are yet to finalize the launch date of the
new car. We have basic concept of the new car ready and very shortly we will finalize the
design of the car.''

The plant which is being set up will see an initial investment of Rs1400 crore. But this
initial investment won't include certain other costs like installing robots and other
automation equipment.

The arrangement of this additional amount required for the plant would be worked out
later. A new test track will be included in the second plant, which is expected to be
spread over 130 acres of land.

Though the new compact car has been designed for the Indian market, the initial design
features indicate that it can be exported to other markets in Asia. Daihatsu, Toyota's
group company, will not be involved in designing the compact new car, though it may be
included in future plans.

However, Tata Motors and Bajaj Auto can rest easy for the time being. Although Okabe
confirmed that the new product will be the cheapest in the Toyota stable, indications are
that it maybe priced higher than its Indian competitors.

Vikram Kirloskar said as much when he commented, ''We are working on the new
design. The model is yet to be finalized. We plan to have petrol as well as diesel versions.
The small car will not compete with the upcoming Nano of Tata Motors, touted to be the
world's cheapest car.''

20
GENERIC STRATEGIES

Generic strategies were used initially in the early 1980s, and seem to be even more
popular today. They outline the three main strategic options open to organization that
wish to achieve a sustainable competitive advantage. Each of the three options are
considered within the context of two aspects of the competitive environment:

Sources of competitive advantage - are the products differentiated in any way, or are they
the lowest cost producer in an industry? Competitive scope of the market - does the
company target a wide market, or does it focus on a very narrow, niche market?

Figure 1.1

The generic strategies are:

21
1. Cost leadership

2. Differentiation

3. Focus.

1. Cost Leadership

The low cost leader in any market gains competitive advantage from being able to many
to produce at the lowest cost. Factories are built and maintained; labor is recruited and
trained to deliver the lowest possible costs of production. 'cost advantage' is the focus.
Costs are shaved off every element of the value chain. Products tend to be 'no frills.'
However, low cost does not always lead to low price. Producers could price at
competitive parity, exploiting the benefits of a bigger margin than competitors. Some
organization, such as Toyota, are very good not only at producing high quality autos at a
low price, but have the brand and marketing skills to use a premium pricing policy.

2. Differentiation

Differentiated goods and services satisfy the needs of customers through a sustainable
competitive advantage. This allows companies to desensitize prices and focus on value
that generates a comparatively higher price and a better margin. The benefits of
differentiation require producers to segment markets in order to target goods and services
at specific segments, generating a higher than average price. For example, Toyota
differentiates its product and service. The differentiating organization will incur
additional costs in creating their competitive advantage. These costs must be offset by the
increase in revenue generated by sales. Costs must be recovered. There is also the chance
that any differentiation could be copied by competitors. Therefore there is always an
incentive to innovated and continuously improve.

3. Focus or Niche Strategy

22
The focus strategy is also known as a 'niche' strategy. Where an organization can afford
neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche
strategy could be more suitable. Here an organization focuses effort and resources on a
narrow, defined segment of a market. Competitive advantage is generated specifically for
the niche. A niche strategy is often used by smaller firms. A company could use either a
cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest
cost producer in that niche or segment. With a differentiation focus a firm creates
competitive advantage through differentiation within the niche or segment. There are
potentially problems with the niche approach. Small, specialist niches could disappear in
the long term. Cost focus is unachievable with an industry depending upon economies of
scale e.g. telecommunications.

1.4 S.W.O.T ANALYSIS

Strengths

New investment by Toyota in factories in the US and China saw 2005 profits rise, against
the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn;
£5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that
this is because the company has the right mix of products for the markets that it serves.
This is an example of very focused segmentation, targeting and positioning in a number
of countries.

In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second
largest carmaker with 6.78 million units. The company is still behind rivals General
Motors with 8.59 million units in the same period. Its strong industry position is based
upon a number of factors including a diversified product range, highly targeted marketing
and a commitment to lean manufacturing and quality. The company makes a large range
of vehicles for both private customers and commercial organisations, from the small
Yaris to large trucks. The company uses marketing techniques to identify and satisfy

23
customer needs. Its brand is a household name. The company also maximizes profit
through efficient manufacturing approaches (e.g. Total Quality Management).

WEAKNESS

Being big has its own problems. The World market for cars is in a condition of over
supply and so car manufacturers need to make sure that it is their models that consumers
want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed
to fluctuating economic and political conditions those markets. Perhaps that is why the
company is beginning to shift its attentions to the emerging Chinese market. Movements
in exchange rates could see the already narrow margins in the car market being reduced.

The company needs to keep producing cars in order to retain its operational efficiency.
Car plants represent a huge investment in expensive fixed costs, as well as the high costs
of training and retaining labour. So if the car market experiences a down turn, the
company could see over capapacity. If on the other hand the car market experiences an
upturn, then the company may miss out on potential sales due to under capacity i.e. it
takes time to accommodate. This is a typical problem with high volume car
manufacturing.

OPPURTUNITIES

Lexus and Toyota now have a reputation for manufacturing environmentally friendly
vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon
advance technologies developed by the organization. Rocketing oil prices have seen sales
of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor
manufacturers, for example Ford has bought into the technology for its new Explorer

24
SUV Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid
R&D.

Toyota is to target the 'urban youth' market. The company has launched its new Aygo,
which is targeted at the streetwise youth market and captures (or attempts to) the nature
of dance and DJ culture in a very competitive segment. The vehicle itself is a unique
convertible, with models extending at their rear! The narrow segment is notorious for it
narrow margins and difficulties for branding.

THREATS

Product recalls are always a problem for vehicle manufacturers. In 2005 the company had
to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension
systems. Toyota did not give details of how much the recall would cost. The majority of
affected vehicles were sold in the US, while the rest were sold in Japan, Europe and
Australia.

As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car
market. Competition is increasing almost daily, with new entrants coming into the market
from China, South Korea and new plants in Eastern Europe. The company is also
exposed to any movement in the price of raw materials such as rubber, steel and fuel.

1.5 COMPETITVE S.W.O.T ANALYSIS

STRENGTH

In an era when owning a car was a distant dream for a vast majority of Indians, MUL
rolled out its first car, the M800. The company labeled it a people's car, with a 796cc 3-
cylinder engine that delivered 39.5bhp at an affordable price of Rs. 65,000. The first
vehicle was released for sale in December 1983. Initially, the car was criticized for its
diminutive size, but it proved to be spacious enough to carry four adults. Better

25
technology and an affordable price due to a higher level of indigenization helped MUL
achieve a dominant position in the Indian passenger car market

WEAKNESS

MARUTI SUZUKI’s biggest weakness, is the lack of product design capability. In the
coming years, they should focus on acquiring product design and lean production know-
how (as the Korean firms did in the eighties and early nineties. Also the Research and
developments headquarters for engine development of Maruti Suzuki are in Japan which
is a major weak point. Maruti Suzuki also needs to invest in capacity and research and
development in India to stay abreast of competition.

THREAT

M800 had ruled the passenger car market as the only car in the entry-level segment in the
Indian automobile industry and was now facing the danger of cannibalization from one of
its own family members, Alto For the first few months of 2004, M800 performed well,
selling 15,301 units in January, 13,518 units in February and 15,540 in March. But
gradually Alto, another MUL product, began eating into M800's share. Alto reported
sales of 8,399 units, 8,324 and 9,011 units in January, February and March respectively.
In April, its sales increased to 9,350 units and in May 2004, Alto took over M800's
position as the largest selling car with sale of 10,373 units, slightly over M800's sales of
10,016 units. Analysts felt that Alto had taken the top spot because of its price reduction
in September 2003 by Rs. 23,000 followed by the launch of the non-AC Alto for Rs. 0.23
mn in the first week of April 2004.

26
 OBJECTIVE AND METHODOLOGY

2.1 SIGNIFICANCE

Toyota's believes in putting the customer first and aims to provide the best levels of
customer satisfaction as its main marketing strategy. Their dealers have also worked hard
to provide their high levels of customer support."

"In the last one year, Toyota has taken many initiatives, which has made Innova the most
successful product. Innova has successfully become a category creator.

We will continue to meet the ever-challenging customer expectations and will come out
with innovative marketing strategies.

With a change of guard at Toyota Kirloskar Motor Ltd., the company has evolved a new
strategy to capture 15 per cent market share in the Indian automotive segment. Effective
from January 1, Atsushi Toyoshima has been appointed Managing Director of the
company, replacing Sachio Yamazaki. "Competition is intense in the Indian market for
domestic and foreign companies. The Indian market is important for Toyota with
potential to aid its growth strategy," Yoshio Ishizaka, Executive Vice-President, Toyota
Motor Corporation, said.

According to analysts, the Indian market would touch annual sales of 1.2 million units by
2005. Last year, Toyota sold 3.8 million units overseas, manufacturing six million
vehicles at 56 plants in 25 countries. In India, the Toyota Quails notched sales of 25,000
units since its launch last year, he said. Toyota's strategy to corner a significant chunk of
the Indian market involves "superior product offering and dedicated technology". In this
27
context, the change of leadership in Toyota's Indian division is important, indicating a
more important role for the company's manufacturing base in Bangalore.

"Bangalore is an ideal location to meet all of Toyota's needs, including auto

components," Mr. Toyoshima said

According to the managing director of Toyota Kirloskar Motor, Atsushi Toyoshima, the
decision to introduce Innova here (India) was based on three factors. First, over the last
five years, the C- segment (between Rs 5 lakh to Rs 10 lakh) of the car market has grown
by 20 per cent every year. The multi utility vehicle segment has also grown at double-
digit levels. Second, with an improving lifestyle and better roads, the Indian consumer
wants to take his vehicle for long drives with friends and family. Third, there is a latent
desire of customers, including those owning MPVs, to seek attributes like greater interior
space and overloading ability, while passenger car buyers look for better styling and
improved riding comfort. Innova brings together the space and fuel economy of an MPV
with the style, agility and power of a sedan. Toyota Kirloskar Motor has described it as
the first three-row seating passenger car in the Indian market

2.2 MANAGERIAL USEFULLNESS

The marketing department can use this study to enhance their marketing strategies for
better sales. This report helps the marketing department in taking decisions to what
change in distribution channels and what should be done so that marketing problem could
be sorted out and how to sell their range of product in the competitive market.

The very essence of every project related to marketing is providing a view to

management for chalk out the organization, so that they can maintain a viable fit between
the organizational objectives, skills and resources and its changing market opportunities.
also give a proper shape to company's target profit and growth. it provides feedback to
the organization about their sales, sales schemes and what impact does it has on the
dealers and consumers. every market research provides useful suggestions to the

28
organization. marketing research helps the firm in every component of the total
marketing task. it helps the firm acquire a better understanding of the buyer, the
competition and the marketing environment. it also aids the formulation of the marketing
mix. product. distribution and pricing needs. it also helps in taking the information of
competitor's strategies and their impact on the buyer. the study reveals the fact that may
have come up during the project and these facts can either be used a opportunities in
exploring and expanding the business as well as can be used as safeguard against threats
by competitors to prepare an effective marketing strategy. Every market research proves
useful to the organization. Marketing research helps the firm in every component of total
marketing task.

2.3 OBJECTIVES OF STUDY

The object of report is not only to focus on competitors but also to get the competitive
position in the national as well as international market through customer satisfaction.
These are as follows.

 To discover and translate the needs and desire of customer into products and
services so as to create the demand of the product (through planning and
producing planned product).
 To serve the customer through channel of distribution.
 To face the keen competition.
 To know about the marketing strategies used by Toyota.
 To know about the marketing strategies of the competitors of Toyota.
 To find out the market share of Toyota.
 To know where Toyota stands as far as the BCG –matrix models concerned.

29
2.4 SCOPE OF THE STUDY

These are some of the scope of the study :

1. The present study can be extended to access the present marketing condition of
Indian automobile sector.
2. The study can be used to design a proper product, price, place and promotional
strategy for the market.
3. From the present study we can know the market share of different products and
accordingly formulated strategy to enhance it.
4. The result of marketing success can be interpreted to assess the rate of employee
satisfaction in various departments.
5. This study can be applied to find out an effective distribution channel to enhance
the sale of various products of Toyota motors.

2.5 RESEARCH METHODOLOGY

This project depends upon the primary as well as secondary sources which are as
follows.

Primary Source:

 Observation
 Experiment
 Talking with consumers,retailers and distributors.

30
 Secondary Source:

 Balance sheet of the company

 Company website

SAMPLE SIZE AND AREAS COVERED

A customer-based survey was conducted in which 100 people were asked to fill the
questionnaire in which 50 people belong to cities of Delhi and GURGAON.

Because it was not possible to consider each and every person of those cities or of
villages so, PROBABILITY SAMPLE or RANDOM SAMPLE was taken.

STATISTICAL AND PRESENTATION TOOLS

PRIMARY DATA is represented:

 First classified i.e. grouped qualitatively and quantitatively according to the
situation or the type of the data which was collected.
 After classifying is represented in the form of tables i.e. systematically arranged
in columns and rows.
 Some of the data is also graphically represented in the form of PIE DIAGRAM.

SECONDARY DATA is represented:

 In the form of tables.
 By the way of BAR GRAPHS and SUBDIVIDED BAR GRAPHS
(Graphical presentation).

31
2.6 LIMITATIONS OF THE STUDY

Since the road to improvement is never ending, so this study also suffers from certain
limitations. Some of them are as follows:

 Because of illiteracy, it was a time consuming method in which

continuous guidance was required.

 Questionnaire method involves some uncertainty of response. Co-

operation on the part of informants, in some cases, was difficult to presume.

 It is possible that the information supplied by the informants may be

incorrect. So, the study may lack accuracy.

32
 CONCEPTUAL DISCUSSION

MARKETING

What is marketing?

There are many different definitions of marketing. Consider some of the following
alternative definitions:

“The all-embracing function that links the business with customer needs and wants in
order to get the right product to the right place at the right time”

“The achievement of corporate goals through meeting and exceeding customer needs
better than the competition”

“The management process that identifies, anticipates and supplies customer requirements
efficiently and profitably”

“Marketing may be defined as a set of human activities directed at facilitating and

consummating exchanges”

Which definition is right? In short, they all are. They all try to embody the essence of
marketing:

• Marketing is about meeting the needs and wants of customers;

• Marketing is a business-wide function – it is not something that operates alone from

33
other business activities;
• Marketing is about understanding customers and finding ways to provide products or
services which customers demand

To help put things into context, you may find it helpful to often refer to the following
diagram which summarises the key elements of marketing and their relationships:

34
 Figure 1.2

MARKETING CONCEPT AND ORIENTATION

It is a fundamental idea of marketing that organisations survive and prosper through

meeting the needs and wants of customers. This important perspective is commonly
known as the marketing concept.

The marketing concept is about matching a company's capabilities with customer wants.
This matching process takes place in what is called the marketing environment.

Businesses do not undertake marketing activities alone. They face threats from
competitors, and changes in the political, economic, social and technological
environment. All these factors have to be taken into account as a business tries to match
its capabilities with the needs and wants of its target customers.

An organisation that adopts the marketing concept accepts the needs of potential
customers as the basis for its operations. Success is dependent on satisfying customer
needs.

What are customer needs and wants?

A need is a basic requirement that an individual wishes to satisfy.

People have basic needs for food, shelter, affection, esteem and self-development. Many
of these needs are created from human biology and the nature of social relationships.
Customer needs are, therefore, very broad.

Whilst customer needs are broad, customer wants are usually quite narrow.
35
A want is a desire for a specific product or service to satisfy the underlying need.

Consider this example:

Consumers need to eat when they are hungry.

What they want to eat and in what kind of environment will vary enormously. For some,
eating at McDonalds satisfies the need to meet hunger. For others a microwaved ready-
meal meets the need. Some consumers are never satisfied unless their food comes served
with a bottle of fine Chardonnay.

Consumer wants are shaped by social and cultural forces, the media and marketing
activities of businesses.

This leads onto another important concept - that of customer demand:

Consumer demand is a want for a specific product supported by an ability and

willingness to pay for it.

For example, many consumers around the globe want a Mercedes. But relatively few are
able and willing to buy one.

Businesses therefore have not only to make products that consumers want, but they also
have to make them affordable to a sufficient number to create profitable demand.

Businesses do not create customer needs or the social status in which customer needs are
influenced. It is not McDonalds that makes people hungry. However, businesses do try to
influence demand by designing products and services that are

• Attractive
• Work well
• Are affordable
• Are available

36
Businesses also try to communicate the relevant features of their products through
advertising and other marketing promotion.

MARKETING MIX

The marketing mix is generally accepted as the use and specification of the four Ps
describing the strategic position of a product in the marketplace. One version of the
origins of the marketing mix starts in 1948 when James Culliton said that a marketing
decision should be a result of something similar to a recipe. This version continued in
1953 when Neil Borden, in his American Marketing Association presidential address,
took the recipe idea one step further and coined the term 'Marketing-Mix'. A prominent
marketer, E. Jerome McCarthy, proposed a 4 P classification in 1960, which would see
wide popularity. The four Ps concept is explained in most marketing textbooks and
classes.

DEFINITION

Although some marketers[who?] have added other Ps, such as personnel and packaging,
the fundamentals of marketing typically identifies the four Ps of the marketing mix as
referring to:
Product -An object or a service that is mass produced or manufactured on a large scale
with a specific volume of units. A typical example of a mass produced service is the hotel
industry. A less obvious but ubiquitous mass produced service is a computer operating
system. Typical examples of a mass produced objects are the motor car and the
disposable razor.
Price – The price is the amount a customer pays for the product. It is determined by a
number of factors including market share, competition, material costs, product identity

37
and the customer's perceived value of the product. The business may increase or decrease
the price of product if other stores have the same product.
Place – Place represents the location where a product can be purchased. It is often
referred to as the distribution channel. It can include any physical store as well as virtual
stores on the Internet.
Promotion – Promotion represents all of the communications that a marketer may use in
the marketplace. Promotion has four distinct elements - advertising, public relations,
word of mouth and point of sale. A certain amount of crossover occurs when promotion
uses the four principal elements together, which is common in film promotion.
Advertising covers any communication that is paid for, from television and cinema
commercials, radio and Internet adverts through print media and billboards. One of the
most notable means of promotion today is the Promotional Product, as in useful items
distributed to targeted audiences with no obligation attached. This category has grown
each year for the past decade while most other forms have suffered. It is the only form of
advertising that targets all five senses and has the recipient thanking the giver. Public
relations are where the communication is not directly paid for and includes press releases,
sponsorship deals, exhibitions, conferences, seminars or trade fairs and events. Word of
mouth is any apparently informal communication about the product by ordinary
individuals, satisfied customers or people specifically engaged to create word of mouth
momentum. Sales staff often plays an important role in word of mouth and Public
Relations (see Product above).
Broadly defined, optimizing the marketing mix is the primary responsibility of
marketing. By offering the product with the right combination of the four Ps marketers
can improve their results and marketing effectiveness. Making small changes in the
marketing mix is typically considered to be a tactical change. Making large changes in
any of the four Ps can be considered strategic. For example, a large change in the price,
say from $19.00 to $39.00 would be considered a strategic change in the position of the
product. However a change of $131 to $130.99 would be considered a tactical change,
potentially related to a promotional offer.

38
CRITICISMS

Peter Doyle claims that the marketing mix approach leads to unprofitable decisions
because it is not grounded in financial objectives such as increasing shareholder value.
According to Doyle it has never been clear what criteria to use in determining an
optimum marketing mix. Objectives such as providing solutions for customers at low cost
have not generated adequate profit margins. Doyle claims that developing marketing
based objectives while ignoring profitability has resulted in the dot-com crash and the
Japanese economic collapse. He also claims that pursuing a ROI approach while ignoring
marketing objectives is just as problematic. He argues that a net present value approach
maximizing shareholder value provides a "rational framework" for managing the
marketing mix.

Some people claim the four Ps are too strongly oriented towards consumer markets and
do not offer an appropriate model for industrial product marketing. Others claim it has
too strong of a product market perspective and is not appropriate for the marketing of
services.

An expanded system based on Seven Ps stresses the importance of Place, Product, Price,
Promotion, People, Process, and Physical evidence

39
MARKET RESEARCH

Market research is for discovering what people want, need, or believe. It can also involve
discovering how they act. Once that research is complete it can be used to determine how
to market your specific product. MR-Anywhere is a very good platform for market
research and analysis

For starting up a business there are a few things that are important:

Market information
Market information is making known the prices of the different commodities in the
market, the supply and the demand. Information about the markets can be obtained in
several different varieties and formats.
Examples of market information questions are:
Who are the customers?
Where are they located and how can they be contacted?
What quantity and quality do they want?
When is the best time to sell?

Market segmentation
Market segmentation is the division of the market or population into subgroups with
similar motivations. Widely used bases for segmenting include geographic differences,
personality differences, demographic differences, use of product differences, and
psychographic differences.

Market trends

40
The upward or downward movements of a market, during a period of time. The market
size is more difficult to estimate if you are starting with something completely new. In
this case, you will have to derive the figures from the number of potential customers or
customer segments. [Ilar 1998]

But besides information about the target market you also need information about your
competitor, your customers, products etc. A few techniques are:

Customer analysis
Choice Modelling
Competitor analysis
Risk analysis
Product research
Advertising research

41
 DATA ANALYSIS

4.1 PERCENTAGE OF TOYOTA OWNERS

OW NERS OF TOYOTA

YES
24%
YES
NO
NO
76%

Figure 1.3

INFERENCE:

 24% of the respondents were owners of Toyota

 76% of the respondents were owners of Honda, Maruti Suzuki, Tata, etc

42
4.2 CUSTOMER SATISFACTION RATING

CUSTOMER SATISFACTION

17%

SATISFIED
DISSATISFIED

83%

Figure 1.4

INFERENCE:

 83% of the Respondents were satisfied with their cars and the services of
TOYOTA

 However 17% of the Respondents were dissatisfied at the same time.

43
4.3 PREFERENCES OF BUYING A NEW CAR

PREFERENCES OF BUYING A NEW CAR

40
30
20
10
0
TOYOTA HYUNDAI MARUTI HONDA

Figure 1.5

INFERENCE:

 19% of the respondents would prefer to buy a Toyota car against its competitors.

 38% of respondents preferred for Maruti.

 19% and 24% respectively preferred for Hyundai & Honda.

44
4.4 WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT
TOYOTA

INFORMATION ABOUT TOYOTA

12%
DEALERS
20%
PRINT MEDIA
T.V.
55%
INTERNET
13%

Figure 1.6

INFERENCE:

 Information through Internet and Print media accounts for more than half or 75%
of the information shared with the masses.

 Rest 25% was shared by T.V. and Dealers for providing the information.

45
 4.5 TOYOTA CARS HAS THE MOST FUEL EFFICIENCY

F UE L E F F IC IE NC Y O F T O YO T A
100 78
80
60
40 22
20
0
Y ES NO

Figure 1.7

INFERENCE:

 78% of the respondents felt that Toyota has the most fuel efficiency.

 While 22% felt it isn’t the most fuel efficient.

46
4.6 THE FEATURES OF TOYOTA AS COMPARED TO OTHER CARS

FEATURES OF TOYOTA
12%

8%

GOOD
10% VERY GOOD
NOT SO GOOD
70% SATISFACTORY

Figure 1.8

INFERENCE:

• 70% of the respondents felt that the features of the Toyota are good.

• While 8% of respondents thought it was not so good, 10% thought it was very
good and 12% felt satisfactory about the features.

47
4.7 THE QUALITIES THAT BEST DESCRIBES TOYOTA

FEATURES THAT BEST

DESCRIBES TOYOTA
38
40
29
30
18
20 15
10
0
HANDLING FUEL DESIGN COMFORT
EFFICIENCY

Figure 1.9

INFERENCE:

 Toyota is best known for its design & comfort.

 Then comes Handling and Fuel Efficiency.

48
 4.8 HOW DO YOU FIND THE INTERIORS OF TOYOTA

INTERIORS OF TOYOTA
7%
3%
GOOD
16%
VERY GOOD
NOT SO GOOD
SATISFACTORY
74%

Figure 1.10

INFERENCE:

• The interiors of Toyota are very good according to 74% of the respondents.

• 16% said it was very good, 7% said it was satisfactory and 3% felt it was not so
good.

49
4.9 WHAT SHOULD BE DONE TO IMPROVE TOYOTA ?

WHAT SHOULD BE DONE TO

IMPROVE TOYOTA
13%
MAKE IT MORE
15% AFFORDABLE
CHEAPER SPARE
PARTS
72% MORE SERVICE
STATIONS

Figure 1.11

INFERENCE:

 If Toyota is made more affordable then it would win more customers, a

theory which was backed by 72% of the respondents.

 15% and 13% respectively want cheaper spare parts and more service
stations.

50
 4.10 WHAT SHOULD BE DONE TO MAKE TOYOTA THE BEST CAR

WHAT SHOULD BE DONE TO MAKE

TOYOTA THE BEST CAR
MAKE IT MORE
15 FUTURISTIC

MAKE IT MORE
10 SPORTY

GIVE IT A RETRO
60 LOOK
15
GIVE IT A
CONCEPT CAR
LOOK

Figure 1.12

INFERENCE:

51
  To make it the best car in its class it should be made more futuristic
which was felt by 60% of the respondents.

 15% of the respondents thought it should be made more sporty.

 10% wanted it to have a retro look and 15% wanted to give it a concept
car look.

4.11 ARE YOU HAPPY WITH THE AFTER SALES SERVICES

PROVIDED BY TOYOTA

HAPPY WITH AFTER SALES

SERVICES PROVIDED BY TOYOTA

15%
HAPPY
UNHAPPY

85%

Figure 1.13

INFERENCE:

52
 Overall 85% of the respondents were happy with the after sales service
provided by Toyota.

 15% were unhappy with Toyota due to poor after sales services provided
by them.

53
 FINDINGS AND RECOMMENDATIONS

5.1 FINDINGS

 76% of the respondents were owners of Toyota

 83% of the Respondents were satisfied with their cars and the services of

TOYOTA, However 17% of the Respondents were dissatisfied at the same time

 18% of the respondents would prefer to buy a Toyota car against its competitors

 Information through Internet and Print media accounts for more than half or 75%

of the information shared with the masses. Rest 25% was shared by T.V. and

Dealers for providing the information

 78% of the respondents felt that Toyota has the most fuel efficiency

 70% of the respondents felt that the features of the Toyota are good. While 8% of

respondents thought it was not so good, 10% thought it was very good and 12%

felt satisfactory about the features

 Toyota is best known for its design & comfort. Then comes Handling and Fuel

Efficiency.

 If Toyota is made more affordable then it would win more customers, a theory

which was backed by 72% of the respondents.15% and 13% respectively want

cheaper spare parts and more service stations.

54
  To make it the best car in its class it should be made more futuristic which was

felt by 60% of the respondents.15% of the respondents thought it should be made

more sporty.10% wanted it to have a retro look and 15% wanted to give it a

concept car look.

5.2 RECOMMENDATIONS

 Toyota should adopt the defensive marketing strategy because as being the second
largest car producer in the international market,

 Toyota must at the moment carry out a feasibility study for launching a vehicle in
the domestic market where it has models like the Innova and Camry amongst
others.

 Toyota should conduct market survey in Indian market for quails in order to know
the perception of Indian consumers.

 Toyota should adopt an offensive marketing strategy for entering in the small car
segment. This market is dominated by Maruti Suzuki and Hyundai in the Indian
domestic auto market.

 Toyota must plan out an ideal marketing producing capacity ,becaue it faces the
problem of over and under capacity in case of upturn and downturn of the market.

55
 ANNEXURE

QUESTIONNAIRE FOR CONSUMER

A) NAME

B) ADDRESS

C) CONTACT NUMBER

D) INCOME GROUP

_________15,000-25,000 _________25, 000-50,000

_________50,000-75,000 _________Above 75,000

1. DO YOU OWN A CAR?

o YES NO

IF YES, THEN WHICH ONE?

(i)TOYOTA (ii) HYUNDAI (iii) MARUTI

2. HOW SATISFIED ARE YOU WITH THE SERVICES OFFERED BY

TOYOTA ?

(i)SATISFIED (ii) DISSATISFIED

56
3. IF SATISFIED, THEN ARE YOU HAPPY WITH THEIR CHARGES AND

TIMELY DELIVERY THEY WERE OFFERING?

(i)HAPPY (ii) UNHAPPY

4. IF GIVEN A CHOICE TO CHOOSE A CAR COMPANY, WHICH

COMPANY WOULD YOU CHOOSE?

(i) TOYOTA (ii) MARUTI (iii) HYUNDAI

5. WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT TOYOTA

(i)DEALERS (ii) PRINT MEDIA

(iii)T.V. (iv)INTERNET

6. DO YOU THINK TOYOTA HAS THE MOST FUEL EFFICIENCY (i)YES

(ii) NO

7. HOW DO YOU FIND THE FEATURES OF TOYOTA AS COMPARED

TO OTHER CARS?

(i)GOOD (ii) VERY GOOD

(iii)NOT SO GOOD (iv) SATISFACTORY

57
8. WHICH OF THESE QUALITIES DO YOU THINK BEST DESCRIBES

TOYOTA ?

(i)HANDLING (ii) FUEL EFFICIENCY

(iii)DESIGN (iv)COMFORT

9. HOW DO YOU FIND THE INTERIORS OF TOYOTA ?

(i)GOOD (ii) VERY GOOD

(iii)SATISFACTORY (iv) NOT SO GOOD

10. ACCORDING TO YOU WHAT SHOULD BE DONE TO IMPROVE

TOYOTA ?

(i) MAKE IT MORE AFFORDABLE

(ii) CHEAPER SPARE PARTS

(iii)MORE SERVICE STATIONS

11. ACCORDING TO YOU WHAT SHOULD BE DONE TO MAKE

TOYOTA THE BEST CAR?

(i)MAKE IT MORE FUTURISTIC

(ii)MAKE IT MORE SPORTY

58
 (iii)GIVE IT A RETRO LOOK

(iv)GIVE IT A CONCEPT CAR LOOK

12. ARE YOU HAPPY WITH THE AFTER SALES SERVICES PROVIDED

BY TOYOTA ?

(i)YES (ii) NO

(iii) HAPPY BUT IT CAN BE BETTER

BIBLIOGRAPHY

Books:

Kotler Philips, Marketing Management: 30th Edition

Chabra T.N., Marketing management 2005

C.B. Gupta, Marketing management 2006

Magazines
Business standard Motoring May 2008 edition

Internet:

www.google.com

www.toyota .com

59
www.yahoo.com

www.domain-b.com

www.wikipedia.com

60