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Summary Case

This presentation focuses in: Toyotas innovation and product differentiation areas. Reasoning of Vietnam market is not ready for Toyotas hybrid car (Prius) and young brand (Scion).

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MARKETING FOR MANAGER


Case: Toyota Product Differentiation
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About Team

Team name: Toyota Teams member: Nguyen Van Thanh Tran Dao Anh Vu Ngo Kim Tu Vuong Gia Bao

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Case: Toyota Product Differentiation


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Table of Content

1 Summary the case & Company Analysis 1.


2. 2 Product Strategy

3 Product Differentiation 3.

4 Case of Scion and Hybrid 4.


5. 5 Conclusion and Recommendation
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Founded in 1937.

Company Analysis

It employs more than 320,000 people worldwide (Toyota Motors, 2009). Company's strategy has been two fold: Efficient marketing strategy Product differentiation. In 1947, started passenger car production. In 1958,sold their first cars in the U.S.

In 1989, introduced Lexus


In 1997, introduced the first hybrid. Scion was introduced for 2002

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Established: 1995

Company Analysis- Toyota Vietnam

Total investment: USD 89.6 million


Production and assembly in VN: Camry, Corolla Altis, Innova, Vios and Fortuner

Sales of imported vehicles: Land Cruiser, Hilux, Yaris, Land Cruiser Prado
Capacity: 30,000 cars/year Employees: More than 1,500 people (including seasonal workers)

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Strong international position Large size of management High financial strength team caused slow in decision Strong brand image making. Industry leader Limited workforce and in manufacturing and production. materials may slow down Excellent penetration in key markets companys growth. 2008 Financial crisis, 2011 Japan disaster

Innovation-first to develop mass-produced hybrid. Expand more aggressively into new segments of the market. To produce more efficiency cars. Continued global expansion.

Increasing competitive pressures. Shifts in the exchange rates. Predictions of a downturn. Changing demographics. Governments encouraging alternative forms of transport. Rising oil prices and the costs of maintaining cars.

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Company Analysis

Toyota remarkable innovations


Total Quality Control Hybrid Safety technologies 4S center Used car center

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Product Strategy

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Toyota manufactures tangible goods 3 levels of product:

Product Strategy

Warranty within 36 months AUGMENTED Customer service support After-sales service: free PRODUCT Inspection Program

Product Classification

A car ACTUAL Test drive PRODUCT Buy and collect and own

Convenience and safe CORE Speed-> Travel around PRODUCT Quality product
Quester, et al 2007
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Product Classification
Toyota manufactures tangible goods
3 levels of product

Product Strategy

Long lasting merchandise goods Durable goods

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Product Strategy

The concepts of Product Mix, Width and Depth


Cars & Minivan

WIDTH

Hybrids & EVs

Crossov ers & SUVs

Trucks

DEPTH

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Product Strategy

Cars & Minivan

Vios

Toyota 86

Hiace

Innova

WIDTH

Hybrids & EVs

Crossov ers & SUVs

Fortuner

Trucks

Hilux

DEPTH

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Product Life Cycle

Product Strategy

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Product Adoption Process

Product Strategy

Awareness Interest Evaluation

Event and Sponsorship to display new products . (Introduce Scion at Music event) Advertising and promotion

PR article and Online- viral marketing

Trial
Adoption

Trial service at stores

Purchase and experience products 16


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Product Differentiation
Product quality Product design and feature Product supporting service

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Product quality
Innovation of the TOTAL QUALITY CONTROL (TQC) Improve quality Improve component product Competitive position

Product Differentiation

Source: http://www.thetruthaboutcars.com

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Product quality
CAR SPEC Price Horsepower Torque City MPG Highway MPG Range Trunk Volume Interior Volume Curb Weight Power-ToWeight 2013 2012 2012 Chevrolet 2012 Ford Honda Hyundai Malibu Fusion S Accord LX Sonata GLS Eco 1SA $25,995 $22,495 $23,070 $21,670 182 171 25 37 577 13.2 100.3 3595 19.8 175 172 22 32 560 16.5 100.3 3403 18.8 177 161 23 34 629 14.7 106 3216 18.2 198 184 24 35 647 16.4 103.8 3199 16.2

Product Differentiation
2013 Nissan Altima S $23,280 182 180 27 38 684 15.4 101.9 3108 17.1 2012 Toyota Camry L $22,900 178 170 25 35 595 15.4 102.7 3190 17.9

Not only high quality desire the success of Toyota Product focus on market creation
Source: http://www.goodcarbadcar.net

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Product quality

Product Differentiation

Development of a wide range of technologies and products with focus on market creation
<Technology development>
Leading edge technologies
Nanotechnology Material technology

<Marketing>

Biotechnology

Energy technology

Assessing customer needs


Exiting technologies

Next generation technologies

Engine

Body

Electronics

Transmission
Environment

Chassis

Proposal of business vision

Safety

IT

Products focused on market creation Comfort Kindness Excitement

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Product feature and design

Product Differentiation

Design

Features

Both

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Product feature and design

Product Differentiation

Target in niche market Provide more than 100 options for customer to tune

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Product feature and design

Product Differentiation

Expanding product line in both depth and wide side to satisfy all different demand of customers.

Sedan

Truck

SUV

New innovation of Green car Hybrid for the new trend of environment protecting. Social Marketing Concept
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Product feature and design

Product Differentiation

Developing in segment of Luxury and sport car with engine technology ,design and safety features Ex: 380 degree safety

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Product Differentiation

Product supporting service Using IT technology to support customer costuming their new cars through the internet. Buy old Toyota and resell for customers Entune technology that help customer to connect with their car through internet at anywhere, anytime as well as provide some application for entertainment, or personal purpose

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Question WHY
hybrid models as has not introduced and young brand as

in

?
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What are hybrid vehicles?

Question

Hybrid vehicles have both a gas engine and an electric motor.


Most successful model: Prius Fuel economy and Reduced emission thanks to New technology

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Question

Target customers
New tech

Technology pioneers

Low emission

Environmental Friendly
Eco-friendly Value Conscious
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Fuel saving

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Scion? I havent heard about it!

Question

Introduced by Toyota in 2002 for the North American market. Target 16-21 year-old: value personal image and difference, with notso-high income. Great customization (150 accessories) with Low starting cost (monospec) Tuning!

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Question

Customization

Personal image

Low

Starting Cost

Average income

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Developing new product

Question

Developing and Introducing new products is frequently expensive and risky. (Muthaly 2011)

NEW has more than 1 meaning/level: to the world, to the market, to the
producer or seller, or combined (McDaniel, Lamb, Hair 2007) New-product development process

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Idea Generation Idea Screening Concept Testing BUSINESS ANALYSIS

Question

Product Development

Test Marketing Commercialization

New-product Development Process

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Question

BUSINESS ANALYSIS

Any problem with Vietnam market?

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Car sales of Vietnam and US (2007-2011)
18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0

Question

Vietnam US

2007 81,000 16,150,000

2008 110,000 13,200,000

2009 119,000 10,400,000

2010 112,000 11,500,000

2011 110,000 12,800,000

Source: Vietnam Automobile Manufacturers Association 2012 and Auto Alliance 2012

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Estimated price of cheapest Prius 2012 in Vietnam
Item
Original price Import Tax SC tax* VAT

Question

Description
On website On original On (1+2) On (1+2+3)

Rate

Value (USD)

Note
1 2 3 4 5

24,000
83% 50% 10%

19,920 21,960 6,588 72,468

Price after tax

Other major charges

On (5)

15%

10,870

Price after tax and charges


Compare to Original price

83,338
347%
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Estimated price of cheapest Scion in Vietnam

Question

Item
Original price Import Tax SC tax* VAT

Description
On website On original On (1+2) On (1+2+3)

Rate

Value (USD) 15,000

Note
1 2 3 4 5

83% 30% 10%

12,450 8,235 3,569 39,254

Price after tax Other major charges


On (5)

15%

5,888

Price after tax and charges


Compare to Original price

45,142
301%
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What does it mean?

Question

Annual income per capita of Vietnam in 2011


$1,411 (source: World Bank) How long can we buy a car? Cheapest Prius 2012: Cheapest Scion: 59 years 32 years

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Meanwhile in US

Question

Annual income per capita of US in 2011


$48,442 (source: World Bank) An average US citizen can buy:

2 cheapest Prius 2012


3 cheapest Scion

IN 01 YEAR ONLY !!!


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Sales forecast of Prius
Year of existence US sales Prius sales Market share VN sales Forecast sales 1
17,400,000

Question

2
17,200,000

3
16,800,000

4
16,500,000

5
16,900,000

5,600

16,000

20,300

24,900

55,900

0.03%

0.09%

0.12%

0.15%

0.33%

81,000

110,000

119,000

112,000

110,000

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169

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Sales forecast of Scion
Year of existence 1 2 3

Question

US

16,900,000

16,900,000

16,500,000

16,100,000

13,200,000

Scion

99,000

120,000

173,000

130,000

114,000

Market share VN

0.59% 81,000

0.71% 110,000

1.05% 119,000

0.81% 112,000

0.86% 110,000

Forecast sales

654

950

664

452

427

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Question

BUSINESS ANALYSIS
Problem with Vietnam?

TINY MARKET SIZE


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MOST IMPORTANT NON-PRICE FACTOR 10000

Question

Number of Votes
8000

NO ECOFRIENDLINESS

6000 7520 4000 7494

NO CUSTOMIZATION

2000

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Fuel Consuming rate

1263 Brand Engine power Exterior

1198 Interior 42

Source: http://dantri.com.vn/c111/s111-523477/yeu-to-nao-tac-dong-su-chon-lua-o-to-cua-

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Consumer Decision-making process
Need recognition

Question

Fuel saving

Information search

Internet, dealers, friends

Evaluation of alternatives

PRICE, brand,
design,

Purchase

Buy TINY cars


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Conclusion & Recommendation

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Innovation

Conclusion & Recommendation

Quality
Product Differentiation Feature & Design Support Service Prius

Vietnam
Scion

Mismatch: Segmentation, Policy Market size


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Conclusion & Recommendation

Better design Outstanding car design Improve product life cycle stage Increase customer value through augmented level compete with competition (Hyundai): longer warranty to 1020 Years

Based on research, Vietnam is not ready for Scion and hybrid product line
If any current conditions changed, Toyota would need to reconsider Rebranding and re-segmenting Scion TC to Toyota match potential young middle income class in Vietnam
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References
Charles, W et al, 2011, Marketing for decision makers, 1st edition, Cengage Learning Australia Pty Limited, Australia Hybrid cars website, viewed on 5 July 2012, http://www.hybridcars.com/blogs/bloglist.php?thread_id=14&month=8&year=2005 McDaniel, C, Lamb, W & Hair, J, 2007, Marketing Essentials, 5th edition, Thomson South-Western, Canada Quester, P, Neal, C, Pettigrew, S, Grimmer, M, Davis, T, Hawkins, D 2007, Consumer Behaviour-Implications for marketing strategy, 5th edition, McGraw Hill, Australia Saatchi and Saatchi, Oasis Agencies Team up for Toyota Prius Ad Campaign, The auto Channel website, viewed on 05 July 2012, http://www.theautochannel.com/news/press/date/20000217/press008186.html SWOT analysis of Toyota, Businessteacher website, viewed on 12 July 2012, http://www.businessteacher.org.uk/business-resources/swot-analysis-database/toyota-swot-analysis/ Toyota History, Toyota website, viewed on 9 July 2012, http://www.toyoland.com/history.html Toyota Hybrid Synergy Drive, Toyota Kentucky website, viewed on 10 July 2012, http://www.toyotageorgetown.com/hybrid/ths6.asp Toyota Hybrids for sale future, Boston website, viewed on 5 July 2012,http://www.boston.com/business/articles/2005/08/03/toyota_looks_to_hybrids_for_sales_future/

Toyota Japan website, viewed on 10 July 2012, http://www.toyota.co.jp/en/about_toyota/history/


Toyota puts hipness ahead of sales for new Scion cars, Bloomberg website, viewed on 09 July, 2012, http://www.bloomberg.com/apps/news?pid=newsarchive&sid=at0Lm7MV8QFI&refer=asia

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Q&A

Thank you for listening

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