Marketing for Managers: Analysis and Recommendations for Toyota Motor Corporation in Singapore
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This report provides a detailed analysis of the marketing strategy of Toyota Motor Corporation in Singapore and offers recommendations for improvement. It covers the macro environment forces impacting the automobile industry, possible segmentation strategies, recommended primary research techniques, and an analysis of the marketing mix strategies.
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Running Head: Report Executive Summary ToyotaMotorCorporationisaJapanesemultinationalorganisationmanufacturing automobiles.This report is prepared from the perspective of a marketing consultant appointed for Toyota Motor Corporation in Singapore. It presents a detailed analysis of the marketing strategy of the organisation adopted at present and make recommendations on the basis of it to make the marketing processes more effective and to improve the performance of the organisation in this market. The current strategy followed for the promotion and marketing of the vehicles by Toyota Motor Corporation is good but there are certain changes required in the approach of the company that can be implemented after collecting primary data with the help of survey research and observational study. This will allow your organisation to understand and gain perspective about what their current and their potential customers expect from the vehicles and from the brand and build on their internal stress while identifying the inherent weaknesses that they need to work on. Toyota is one of the most profitable automobile organisations in the world and manufacturers more than 10 million vehicles in a year. The organisation needs to now focus on the three customer segments highlighted in the study classified on the basis of their demographic, psychographic and behavioural features. The organisation can also improve its competitive by promoting the hybrid vehicle product line and Toyota Harrier specifically as it fits the needs and expectations of the target customer segments. 1
Running Head: Report Contents Executive Summary...............................................................................................................................1 Business Background............................................................................................................................3 Macro environment forces impacting the automobile industry in Singapore.........................................4 Political forces...................................................................................................................................5 Technological forces..........................................................................................................................5 Socio-cultural forces..........................................................................................................................6 Possible basis of segmentation for Toyota in Singapore........................................................................7 Demographic segment.......................................................................................................................7 Psychographic segment.....................................................................................................................7 Behavioural segment.........................................................................................................................8 Recommended primary research techniques..........................................................................................9 Survey research.................................................................................................................................9 Observational research....................................................................................................................10 Marketing strategy analysis.................................................................................................................11 Marketing mix strategies.................................................................................................................11 Product............................................................................................................................................11 Pricing.............................................................................................................................................11 Promotion........................................................................................................................................11 Place................................................................................................................................................12 Improving competitiveness..............................................................................................................13 3 types of Services used in marketing strategies..................................................................................14 People..............................................................................................................................................14 Processes.........................................................................................................................................16 Physical evidence............................................................................................................................16 Conclusion & recommendations..........................................................................................................17 References...........................................................................................................................................18 2
Running Head: Report Business Background ToyotaMotorCorporationisaJapanesemultinationalorganisationmanufacturing automobiles. Founded on 28 August 1937 by Kiichiro Toyoda, it is one of the largest automotive organisations in the world. The headquarters of the organisation is located at Toyota, Aichi, Japan and the organisation has a global workforce of more than 370,000 employees.ToyotaMotorCorporationhasfivedistinctdivisionsunderwhichthey manufacture the vehicles namely Toyota, Lexus, Daihatsu, Ranz and Hino. Along with this, the organisation has stakes in various other automobile organisations and operates in a joint venture with the organisations in India, China and the Czech Republic(Toyota, 2015). Producing more than 10 million units annually, Toyota Corolla is the oldest and the largest selling vehicle of the company, having sold more than 40 million units in July 2013. Toyota Corolla is a subcompact car that was first produced in the year 1966. Although the vehicle has gone through major -redesigning over the years, it became the bestselling car throughout the world in the year 1974 and has maintained that position ever since. Toyota Motor corporation carries out designing, manufacturing, assembly and sale of passenger cars, commercial vehicles, minimax and their related parts and accessories. The major areas of operation for the organisation are Japan, North America, Asia and Europe(Nkomo, 2017). 3
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Running Head: Report The global market shares of Toyota Motor Corporation for the year 2018 was 9.46% what's the highest among all the brands and automotive organisations. The closest competitors to Toyota when it comes to the global automobile market are Volkswagen, Ford, Nissan, Honda and Hyundai. Macro environment forces impacting the automobile industry in Singapore The macro environmental factors are the factors related to the external environment of the industry that impacts its operations and profitability. The macro environment comprises of the demographic, economic, technological, political and socio-cultural forces that shape the industry,buyingbehaviourofthecustomersandtheirexpectations.Thethreemost significant macro environmental forces influencing the automobile industry in Singapore are discussed in this section(Barter, 2015). 4
Running Head: Report Political forces Singapore is one of the most expensive places in the world for owning a vehicle. The Government of Singapore has put in place various regulatory measures in the form of the Certificate of Entitlement (COE), Electronic Road Pricing (ERP) and the custom duties for keeping a check on the number of vehicles running on the road. The COE is the most significant factor that influences the sales of the automobiles the people of Singapore have to place bits in an open with uniform price auction for attending the legal right for registering, owning and using a vehicle in the country for the next 10 years(Commin, 2018). This has been in place in Singapore since 1990 to limit the number of vehicles and to provide better management of the transport network of roads by restricting the vehicle ownership by the people. Along with this, the Government of Singapore has also imposed the congestion tax in the form of ERP for improving traffic management and to maintain a sustainable quality of life across the region(Mohr, et al., 2016). Technological forces The digitisation and changes in the business models have brought about numerous changes in the automotive industry of Singapore. The electrification of the vehicles, diverse mobility, and autonomous driving adjust few trends that resulted in the disruption of the trends that are currently being followed in the industry. Technology plays a significant role in changing the course of businesses and as the latest technology diffuses across Singapore, the performance the different brands operating in the automotive industry and their profitability will be impacted(Cleanair Asia, 2016). Because of the increasing competition and changes filled by the latest technological advancements, do organisations have to simultaneously compete with one another and with the Other industries on multiple fronts in order to target the right customer segments and still target the segments that are economically attractive(Ferguson, 2017). 5
Running Head: Report Socio-cultural forces The socio-cultural trends of focusing on sustainability and reducing emissions have made the business organisations come up with ways to adopt the practices that reduce their carbon footprintandalsocontributetoenvironmentalsustainability(NEA,2011).Thereis unprecedented scrutiny by the regulators, customers and shareholders requiring adherence to the environmental norms by the vehicles produced throughout the world. Along with this, the trend like corporate social responsibility also shapes the global value chain of the automobile industry and the same holds true for Singapore as well. The national regulators in Singapore are constantly increasing the pressure on the automobile industry to embrace compliance, transparency and good corporate governance influencing the way these organisations operate and carry out their business(Zong & Qun, 2017). 6
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Running Head: Report Possible basis of segmentation for Toyota in Singapore The market segmentation for the automobile industry in Singapore is focused on the group of customers and their needs and expectations from the vehicles. Segmentation of the customers and correct targeting it is important for the success of the business organisation. If your wishes to maximize the customer satisfaction level for their customers in Singapore, it is important that the organisation correctly identifies the various segments of the consumer market and select the segments to be targeted on the basis of their needs from the brand. This part of the report presents the three possible bases of segmentation that can be used by Toyota for targeting the right customers and maximizing their profitability in Singapore. Demographic segment The demographic segmentation of automobile customers in Singapore can be done on the basis of their income and family size. The customers falling in the lower and medium income category are not the ones that Toyota should target as the cost of owning a vehicle in Singapore is very high. Therefore, the organisation should only target the high income group customerswhocanaffordtopurchaseandcorporateacarinthecountry.Another demographic segment that the organisation needs to focus on is the established families that havechildreninthehousehold.Thiscustomersegmentrequiresalargerandmore comfortable medium for moving around and therefore, they are more likely to purchase a car instead of depending on public transport or rented vehicles(Anable & Schuitema, 2011). Psychographic segment The psychographic segmentation recommended for Toyota is on the basis of the social class and lifestyle of the people. This requires the division of the entire market into segments on the basis of the personality traits, values and attitudes of the consumers. The psychographic profilingofautomobilecustomersinSingaporecanallowToyotato targettheright 7
Running Head: Report customers. The people war inherently ambitious and aim to be upwardly mobile in their approach to transport are more likely to purchase a vehicle for improving their lifestyle. These people are materialistic and often purchase things for symbolising success and achievement in life. The organisation can target this customer segment by advertising the vehicles as a luxury that is only owned by the successful people(Garling, 2018). Behavioural segment Toyota is fairly active in its approach to going green and is developing hybrid vehicles that runonalternatesourcesofenergy.Thecustomersegmentofthepeoplewhoare environmentally conscious should be targeted by the organisation by promoting vehicles that are low on emissions and are developed on the eco-sensitive technology by providing the best design. In Singapore, Toyota has launched the Toyota Prius hybrid which is targeted at the luxury hybrid car segment providing superior performance while reducing the negative impact of the traditional vehicles on the environment. The organisation can target the environmentally conscious customer segment through this line of vehicles that is extremely efficient and answers the needs of this customer segment effectively(Larsen, 2010). 8
Running Head: Report Recommended primary research techniques The business organisations require the collection and analysis of primary data is it provides them with the original perspective on the needs of the customers and also provides them with a chance to gather the information that is relevant for their specific problem. The primary datacollectedby the businessorganisationsprovide themwith accurateand updated information that can be analysed to get reliable results assessing the effectiveness of business activities and the results obtained from them. In order to operate successfully in Singapore, it is suggested that Toyota Motor Corporation makes use of techniques for primary data collection for gathering information related to customer satisfaction and for taking steps to improve their practices for enhancing it. The suggested primary research techniques for Toyota Motor Corporation in Singapore are presented in this section. Survey research Survey research easy to develop and allows the organisation together a lot of information conveniently through the online and offline medium. It is suggested that Toyota Motor Corporation should make use of online surveys that can be circulated to their target customer groups to understand their expectations from the vehicles and bring about the necessary changes in their cars. Along with this, the organisation can also make use of this technique forgetting feedback from their existing customers by asking them questions about their current satisfaction level and any suggested changes that will help the organisation in improving the vehicles and their operations in the country. This technique is suggested for Toyota Motor Corporation as it reduces geographical dependence and allows the organisation to collect data from a large number of people in a cost-effective manner(Rahman, 2016). This also provides them with an opportunity to collect a broad range of data and the survey 9
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Running Head: Report questionnaires can be standardized or customised on the basis of the customer segment from which the information is to be obtained. Observational research The observational research technique is another effective method for data collection for the Toyota Motor Corporation. The organisation can observe the buying behaviour of the customers by conducting field research of the organic behaviour demonstrated by the customers in the natural environmentto understand how they react to the marketing initiatives of Toyota Motor Corporation and how satisfied they are with the vehicles and options offered to them. The organisation can make use of observational research to gain significant insights about their behaviour and identify any conscious or subconscious bias that they may hold towards the brand for their vehicles. Observational research also provides Toyota Motor Corporation with a real-world perspective by getting a description of the consumer behaviour instead of taking the decisions based on hypothetical facts and figures or assumptions made by organisational leaders. Observational research technique is a more reliable measurement of the actual behaviour demonstrated by the customers as compared to any other metrics adopted by the company(Toyota Motor Corporation, 2019). 10
Running Head: Report Marketing strategy analysis Marketing mix strategies The marketing mix strategy of an organisation comprises of the four elements of product, pricing, promotion and place. Analysing the marketing mix for Toyota in Singapore: Product Toyota offers a wide variety of cars in Singapore specific to the needs of the different customersegments.Theorganisationhaswhichvarietyofsedans,SUVs,MPVand hatchbacksthatthe customerscan choose from along with the automobileparts and accessories. The organisation has specifically put together the hybrid product line for catering the changing technology and the expectations of the customers who are environmentally conscious. Toyota Prius was the first Hybrid Car that was developed by the organisation in the year 1987 and launched in Singapore in the year 2001. The models Camry and Highlander are the latest addition to the hybrid product line of Toyota in Singapore (Arachchige, 2012). Pricing Toyota is known to keep the customers first and the worldwide success of the organisation can be attributed to the excellent quality of the vehicles and the moderate pricing. However, in Singapore, Toyota is positioned as a premium brand offering the latest and top quality vehicles that are priced higher than and the competitors. Promotion The promotional strategies adopted by tomorrow in simple extremely innovative and they make use of both electronic and non-electronic mediums for communicating with their customers. Toyota uses catchy slogans that help the organisation to draw the attention of its 11
Running Head: Report target audience and they also provide the customers with regular discounts and offers for promoting and increasing the sales of the vehicles. The organisation faced a challenge and setback in the year 2018 when they had to recall more than 4000 Toyota Prius in Singapore as a part of the Global recall of the organisation because of the problems with the fuel emission control unit of the vehicle and the airbags. Currently, the focus of the organisation is on improving and promoting the hybrid line of vehicles. In the advertisement included below, Toyota claims that its hybrid Prius has emissions lower than that of a goat. This is an excellent strategy to attract customers towards this line of vehicles(Dhas, 2014). Place Toyota has local dealerships that distribute the products of the company across Singapore. The main places at the centre of the distribution strategy of Toyota in Singapore are the dealerships and retailers. While the dealerships dominate the sales transactions for the 12
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Running Head: Report vehicles sold in Singapore, your organisation also supplies the vehicles to the retailers along with the automobile parts and accessories(Dann, 2015). Improving competitiveness In order to improve the competitiveness of the brand Toyota in the automobile industry in Singapore, it is suggested that your organisation adopt the right promotion practices to enhance the effectiveness of their marketing communication. Toyota Prius was a part of controversy because of the recalled throughout the world and therefore it is suggested that the organisation shift the focus to the latest addition to its hybrid product line Toyota Harrier which is a turbocharged SUV gaining popularity in the market of Singapore. The organisation should start connecting the customers on social media platforms and make use of the search engines for promoting this product. The luxury model of Toyota Harrier is priced at about $189,988 with COE in Singapore. The organisation also has an Elegance model of the Harrier that is price lower but does not have the various features that are expected in an executive car. Therefore, it is suggested that the organisation focuses on promoting this vehicle with the help of the latest communication tools for increasing the sales and for enhancing the brand reputation and recognition across Singapore. 13
Running Head: Report 3 types of Services used in marketing strategies The marketing strategies of the organisations also make use of services that can be linked with Toyota Motor Corporation and their promotional strategies in Singapore. The three types of services described for the company are: People All the people that are directly and indirectly involved with the operations of Toyota Motor Corporation in Singapore include the employees of the company, the members involved in the value chain, the retailers, suppliers and distributors of the vehicles, the current and potential customers of the company, external stakeholders, the Government of Singapore, regulatory bodies and activist groups influencing the operations of the company(Ulster Bank, 2014). 14
Running Head: Report (Graban, 2013) 15
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Running Head: Report Toyota has a “Respect for People” principle which is one of the most significant parts of The Toyota Way highlighting the values and the conduct guidelines followed at the organisation. The organisation values humanity and has respect for the skills of the people challenging them regularly to improve their abilities instead of just being superficially nice to them. Processes The processes followed for the manufacturing, supply and delivery of the vehicles by Toyota Motor Corporation are covered under is service type for the company. The organisation manufacturesthe vehicles, vehiclepartsand accessoriesat the variousmanufacturing facilities located across the world and they are shipped to Singapore for sale by the distributors and retailers(Išoraitė, 2016).The organisation follows continuous improvement and provides continuous assistance and service to the people for chasing their vehicle instead of treating them as a one-time transaction. Toyota Motor Corporation is considered to be the king of Total Quality Management (TQM). The concept of quality is at the core of the Toyota productionsystemallowingtheorganisationtoincreasetheirprofitsandcustomer satisfaction resulting in sustainability in the long run. Physical evidence The physical evidence for the operations of Toyota Motor Corporation in Singapore includes the corporate offices of the organisation, the showrooms of the retailers and distributors, the vehicles of the company and the storage facilities. 16
Running Head: Report Conclusion & recommendations In conclusion, it can be stated that the current strategy followed for the promotion and marketing of the vehicles by Toyota Motor Corporation is good but there are certain changes required in the approach of the company that can be implemented after collecting primary data with the help of survey research and observationalstudy. Thiswill allowyour organisation to understand and gain perspective about what their current and their potential customers expect from the vehicles and from the brand and build on their internal stress while identifying the inherent weaknesses that they need to work on. Toyota is one of the most profitable automobile organisations in the world and manufacturers more than 10 million vehicles in a year. The organisation needs to now focus on the three customer segments highlighted in the study classified on the basis of their demographic, psychographic and behavioural features. The organisation can also improve its competitive by promoting the hybridvehicleproductlineandToyotaHarrierspecificallyasitfitstheneedsand expectations of the target customer segments. Toyota is known for perfection and for excellent quality management techniques. It is recommended that the organisation takes advantage of the culture, history and values of Toyota Motor Corporation and the trust that customers have on the brand when marketing their products. Toyota Motor Corporation was also one of the first movers in the hybrid vehicle product segment and your organisation should continue to carry out research and development in this field to come up with technologically advanced vehicles that run on alternate sources of energy so that they continue to be a market leader in the coming years as well. 17
Running Head: Report References Anable, J. & Schuitema, G. (2011)Who will adopt electric vehicles? A segmentation approach of UK consumers, Available at: https://www.eceee.org/library/conference_proceedings/eceee_Summer_Studies/2011/4- transport-and-mobility-how-to-deliver-energy-efficiency160/who-will-adopt-electric- vehicles-a-segmentation-approach-of-uk-consumers/2011/4-560_Anable.pdf Arachchige, J. (2012) Application of marketing mix elements (4Ps) in the Library sector, Available at: https://www.researchgate.net/publication/28803889_Application_of_marketing_mix_element s_4Ps_in_the_Library_sector Barter, P. (2015)A vehicle quota integrated with road usage pricing: a mechanism to complete the phase-out of high fixed vehicle taxes in Singapore, Available at: https://lkyspp.nus.edu.sg/docs/default-source/faculty-publications/paul-a-barter/barter-vqs- integrated-with-road-usage-charging-transport-policy.pdf?sfvrsn=8e30940b_2 Cleanair Asia. (2016)Vehicle inspection and Maintenance in Asia policy profile: singapore, Available at: http://cleanairasia.org/wp-content/uploads/2016/08/CountryProfile_Singapore.pdf Commin, H. (2018)The Congestion Charging Schemes of London and Singapore: Why Did London Choose Different Technology, and Was this a Mistake?, Available at: https://skynet.ee.ic.ac.uk/~hcommin/ComminDissertation.pdf Dann, S. (2015) The Marketing Mix Matrix,Available at: https://www.researchgate.net/publication/267559484_The_Marketing_Mix_Matrix 18
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Running Head: Report Dhas, A. (2014) Marketing Mix, Critical Review on Marketing Mix,Available at: https://www.academia.edu/6210881/Marketing_Mix_Critical_Review_on_Marketing_Mix Ferguson, E. (2017) Toyota PESTEL/PESTLE Analysis & Recommendations,Available at: http://panmore.com/toyota-pestel-pestle-analysis-recommendations Garling, A. (2018)Market segmentation, marketing communication strategies and electric vehicle drive, Available at: https://www.diva-portal.org/smash/get/diva2:998548/FULLTEXT01.pdf Graban, M. (2013) Toyota, Respect for People (or “Humanity”) and Lean, Available at: https://www.leanblog.org/2013/02/toyota-respect-for-people-or-humanity-and-lean/ Išoraitė, M. (2016) Marketing mix theoretical aspects. 4(6), pp. 1-13,Available at: http://granthaalayah.com/Articles/Vol4Iss6/04_IJRG16_C06_07.pdf Larsen, N. (2010)Market Segmentation- A framework for determining the right target customers, Available at: https://pure.au.dk/portal/files/11462/BA.pdf Mohr, D., Kaas, H., Gao, P. & Wee, D. (2016)Automotive revolution – perspective towards 2030, Available at: https://www.mckinsey.com/~/media/mckinsey/industries/high%20tech/our %20insights/disruptive%20trends%20that%20will%20transform%20the%20auto %20industry/auto%202030%20report%20jan%202016.ashx NEA (2011)Environmental Protection Division Report 2011, Available at: https://www.nea.gov.sg/docs/default-source/resource/publications/environmental-protection- division-annual-report/epd-2011.pdf Nkomo, T. (2017)Analysis of Toyota Motor Corporation, Available at: https://scholar.harvard.edu/files/tnkomo/files/analysis_of_toyota.pdf 19
Running Head: Report Rahman, M. (2016) The Advantages and Disadvantages of Using Qualitative and Quantitative Approaches and Methods in Language “Testing and Assessment” Research: A Literature Review,Available at: https://www.researchgate.net/publication/309889936_The_Advantages_and_Disadvantages_ of_Using_Qualitative_and_Quantitative_Approaches_and_Methods_in_Language_Testing_a nd_Assessment_Research_A_Literature_Review Toyota Motor Corporation. (2019) Life Cycle Environmental Activities for Next-generation Vehicles,Available at: https://global.toyota/en/sustainability/esg/challenge2050/challenge2/ lca-and-eco-actions/ Toyota. (2015)The Paths Leading to the Future: Vehicle Lineageconnecting the dots into lines and surfaces to portraythe 75-year history of Toyota, Available at: https://www.toyota- global.com/company/history_of_toyota/75years/vehicle_lineage/pdf/vehiclelineage.pdf Ulster Bank. (2014)Marketing:The Marketing Mix, Available at: https://www.business- achievers.com/wp-content/uploads/2014/06/marketing-mix.pdf Zong, C. & Qun, T. (2017)National Environment AgencyEnvironmental Protection DivisionAnnual Report 2017, Available at: https://www.nea.gov.sg/docs/default-source/resource/publications/environmental-protection- division-annual-report/epd-annual-report-2017.pdf 20