BUSN20019: Analyzing R&D and Promotion Impact on Toyota Sales

This report investigates the impact of research and development (R&D) and promotion on Toyota's sales volumes. It uses secondary data to analyze the individual effects of R&D and advertisement on sales. The findings suggest that R&D has a more significant impact than advertisement on sales. The report identifies key elements of both R&D and promotion that are crucial for enhancing sales volumes, including product innovation, digital marketing, and customer satisfaction. It also addresses the role of transparent information, revenue generation, and patent products in driving sales. The research employs a quantitative analysis approach and concludes with recommendations for Toyota to optimize their R&D and promotional strategies.

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Executive Summary
The research is aimed at identifying the impact of research and development and promotion on
the sales volumes of Toyota. The study had separately analyzed the impact of both the
independent variables on the dependent variable. Secondary data had been collected to conduct
the study and the result had shown that research and development had more significant impact
than advertisement on sales volumes. The research has concluded essential elements of both the
independent variable that are crucial in improving sales volumes.

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Table of Contents
1.0 Introduction................................................................................................................................4
1.1 Background of the study........................................................................................................4
1.2 Rationale of the study............................................................................................................5
1.3 Research aim..........................................................................................................................5
1.4 Research Hypothesis..............................................................................................................5
1.4 Research objectives...............................................................................................................5
1.5 Research Questions................................................................................................................6
2.0 Literature Review......................................................................................................................7
2.1 Involvement of cost in essential aspects for product research and development (R&D)......7
2.1.1 Theory for product R&D................................................................................................7
2.1.2 Product innovation..........................................................................................................8
2.2 Cost involvement in important aspects of advertisement....................................................10
2.2.1 Digital marketing..........................................................................................................10
2.2.2 Traditional marketing...................................................................................................10
2.3 Impact of product research and development on sales of an organization..........................10
2.3.1 Transparent information...............................................................................................10
2.3.2 Higher customer satisfaction........................................................................................11
2.3.3 Impact of research and development on generation of revenue.......................................11
2.3.3 Development of more patent products..........................................................................12

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2.4 Impact of advertisement on sales of a company..................................................................12
2.4.1 More knowledge on diverse effort................................................................................12
2.4.2 Ease in sharing feedbacks.............................................................................................12
2.4.3 Developing a distinctive brand.....................................................................................13
2.4.4 Impact of advertisements on generation of revenue.....................................................13
3.0 Research Methodology............................................................................................................14
3.1 Research Philosophy............................................................................................................14
3.2 Research Approach..............................................................................................................14
3.3 Research Purpose.................................................................................................................15
3.4 Data Collection Method.......................................................................................................15
3.5 Data Analysis Technique.....................................................................................................15
3.6 Sampling Technique............................................................................................................15
3.7 Research Ethics....................................................................................................................16
3.8 Research Limitation.............................................................................................................16
4.0 Findings and Analysis..............................................................................................................17
4.1 Quantitative analysis............................................................................................................17
5.0 Conclusion...............................................................................................................................23
5.1 Objective 1- To identify the factors researched by R&D department that can promote sales
of Toyota automobiles................................................................................................................23

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5.2 Objective 2- To investigate the advertisement aspects that can attract customers to
purchase Toyota automobiles....................................................................................................24
5.3 Recommendations................................................................................................................24
References and Bibliography.........................................................................................................25

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1.0 Introduction
1.1 Background of the study
This study will portray the impact of research and development in improving the sales
volumes of the organization named Toyota. As stated by Camisón & Villar-López, (2014),
innovation and creativity are essential for gaining competitive advantage and maintaining
sustainability of the industry. Toyota is the market leader in their segment due to their
operational efficiency, which has enabled them to increase their operational margin. It is also the
market leader in terms of sales volumes in the organization. As stated by Lee et al., (2015), most
of the global companies have changed their orientation form being product oriented to marketing
oriented. Globalization has made availability of information to different parts of the world so
effective use of promotional strategy is essential for gaining competitive advantage in the
market. Digital marketing plays an important for promotional success in today’s market and the
study will evaluate the influence of promotional strategies and innovation for improving the sales
volumes in Toyota.
1.2 Rationale of the study
The primary goal of any organization either is profit maximization, which is achieved by
either increasing the sales volumes, or decreasing the cost structure by increasing operational
efficiency. This study will focus on identifying the strategies required to improve the sales
volumes, which are effective use of innovation and promotion. Innovation is necessary for
catering to the present needs of the consumers and promotion is required for increasing brand
awareness and market penetration. This study will emphasize the impact of research and
development cost and promotional cost on the sales volumes of Toyota.

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1.3 Research aim
The research is aimed at identifying the impact of research and development and
promotion on the sales volumes of Toyota. The study will separately analyze the impact of both
the independent variables on the dependent variable.
1.4 Research Hypothesis
H10- There is no impact of cost invested in R&D on the sales of Toyota cars
H11- There is a positive impact of cost invested in R&D on the sales of Toyota cars
H20: There is no impact of cost invested in advertisement on the sales of Toyota cars
H21- There is a positive impact of cost invested in advertisement on the sales of Toyota cars
1.4 Research objectives
 To identify the relationship between product R&D and sales of Toyota automobiles
 To examine the impact of advertisement on sales of Toyota automobiles
1.5 Research Questions
 Does product R&D affect the sales of Toyota automobiles?
 Is there any significant relationship between and sales of Toyota automobiles?

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2.0 Literature Review
2.1 Involvement of cost in essential aspects for product research and development (R&D)
2.1.1 Theory for product R&D
Bouncken et al. (2016) stated that automotive industry utilizes the “sense– respond–
learn” approach for products innovation for motivating customers to buy their products.
Image 1: Sense– Respond–Learn Model for Product Innovation
(Source: Bouncken et al., 2016)
Casadesus‐Masanell and Zhu (2013) depicted that the organization gathers data from
marketing surveys and customer clinics and then utilize the information for developing ideas for
new technology. The analysis is related to the guide vehicle and feature of the automobile and
this study is helpful in assessing the opportunity in emerging markets (Pagell & Shevchenko,
2014). The response collected is divided into two parts- develop and execute. Christopher
(2016) stated that if the response is found to be effective, it is executed for developing products,

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process and business portfolios; otherwise, the ideas are considered for future technology
options.
2.1.2 Product innovation
Slater et al. (2014) stated that an organization should continuously invest cost in
improving the product in order keep their customer motivated to remain associated with the
company. The term product innovation refers to introduction of new service or goods for
indented use of the products and characteristics (Im et al., 2013). Some companies invest cost in
developing new products; while, some invest cost in re-inventing the product.
2.1.2.1 New product development
Bohnsack et al. (2014) stated that in new product development, the process of changing
the form of the products is focused along with the changes in components, materials and
packaging of a product. The change can also be related with the transformation of technical ideas
(Gunther et al., 2015). Taken for instance, in conventional time, driverless cars especially for
SUVs like Lexus have been innovated by some companies like Google (Dethe et al., 2016). The
car has the facility of video camera for detecting traffic lights or any moving objects, lidar, a
rotating sensor to create a three dimensional (3D) map of the environment, distance sensor to
measure the distance of various obstacle and position estimator to evaluate car’s position in the
map.

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Image 2: Google’s Driverless Car- Waymo
(Source: Dethe et al., 2016)
2.1.2.2 Re-invention of existing product
Kastalli and Van Looy (2013) stated that the process of converting ideas and strategies
into information in order to create a new product is refers as designing of the products. Zailani et
al. (2015) highlighted that designing or re-inventing product is the core of innovation in order to
develop a new object. Taken for instance, Yoo (2013) stated that in automobile companies, fuel
was used in traditional days and now electric cars have been invented in order to diminish the
carbon emission rate. Moreover, in order to avoid car crashes, automobile companies have also
developed vehicle-to-vehicle (V2V) communication technology that uses 'ad hoc network'
(Pinkse et al., 2014).

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2.2 Cost involvement in important aspects of advertisement
2.2.1 Digital marketing
Kannan (2017) depict that digital marketing focuses on all the target market with the help
of internet. Samson et al. (2014) also stated that digital marketing provides the opportunity to
SME to make people aware of their business. This platform also offers established organizations
to share the initiative taken for attracting their existing customers towards their products.
(Armstrong et al., 2014) on the other hand argues that advertisement is used to generate or
increase the rand awareness and it cannot be used for motivating people to buy products. Charan
and Dahiya (2015) thus present a counter statement that in case of digital advertisement, there is
less space issue and some organization represents comparison of their products with competitive
organization to make people aware of the enhanced features and quality of the products.
2.2.2 Traditional marketing
In automotive industry, the main audience targets are business people and person with
high income (Boone & Kurtz, 2013). These people can also be reached through traditional
marketing like newspaper advertisement and promotion through business magazines. Thus, the
cost involved in traditional marketing also helps in promoting the brand and attract
businesspeople to know about their products.
2.3 Impact of product research and development on sales of an organization
2.3.1 Transparent information
The result of research and development is represented in the performance of the products.
The quality of the product is improved due to the research made in the function of the products.
However, Casadesus‐Masanell and Zhu (2013) stated that the adverting of the R&D initiatives
promote the sales as customer intends to buy new products or have the desire to get a new

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experience. People can see the performance of the newly developed products through their
research. This is also helpful when an organization intends to expand their market in other nation
or territory (Pinkse et al., 2014). The research and development department research on the target
market, preference of the products and the quality they prefer.
2.3.2 Higher customer satisfaction
The more the people are satisfied by the product invention by the R&D department, the
more will be the sale of that particular company. This department is liable to develop products or
characterizes of the products that closely matches the customer demand. Thus, the impact of
research and development department can be seen on the customer satisfaction (Yoo, 2013).
Berends et al. (2014) on the other hand stated that higher customer satisfaction boosts the sales
of the organization.
2.3.3 Impact of research and development on generation of revenue
In the current business scenario, creativity and innovation is the key to success for the
business organizations. This is due to the reason that, offering innovative products in the market
will help them to stay ahead in the competition. This is the reason behind the initiation of the
research and investment by the business organizations. More investments in the research and
development will help them in rapidly the developing the existing products and introduce new
products. According to Hall, Lotti and Mairesse (2013), initiation of the research and
development is having positive impact on the generation of the sales revenue.
This is due to the reason that, the products will be more updated and caters to the change
in the market with the help of the effective research and development. Thus, customers will be
more attracted with the help of the updated products, which will ultimately enhance the