Toyota Marketing Pan-Regional Approach
...bility to effectively deal with four main issues as raised by managers at Toyota's Challenge 2000 conference. First, the cost of ownership is applicable two fold; both the financial cost as well as the perceived value must be taken into account when looking at optimizing the cost-benefit relationship. Second, customer satisfaction relates to the ability to add value throughout the whole consumer decision-making process, ultimately enhancing the purchasing and owning experience. Third, network development refers to the alignment and efficiency of the TMME's distribution channels by working more closely with distributors and dealers, creating shared goals and facilitating integrated activities. Finally, brand management is critical for repositioning Toyota's image to appeal to European consumers as well as increase brand control. Alternative #1 - Building Toyota as a Japanese Brand This alternative would continue to position Toyota as a foreign importing firm. Focus would be placed upon building a more positive Japanese image with the brand by creating positive associations towards Japanese brands in general. Ideally, this strategy would educate Europeans on Japanese culture and values and highlight Toyota as the ideal Japanese brand. This, however, may make it difficult to differentiate Toyota from other Japanese companies and certainly would not help the company to appeal to existing preferences and consumer tastes. The Japanese-brand strategy would capitalize on a desire to both reduce costs and position the company as producing high value for low cost vehicles. However, with respect to customer satisfaction, this strategy would not actualize TMME's desire to increase customer focus and thereby increase customer satisfaction. The application of Japanese traits, rather than traits appealing specifically to the European consumer, would therefore, not be considered a value-adding marketing activity. Network development would be equally ineffective as there is no structured co-operative movement throughout the channels of distribution. The alignment of channels could alternatively work to increase customer satisfaction by meeting the needs and wants of local consumers. By pursuing a Japanese brand positioning strategy, any efforts to satisfy consumers would be derived from the Japanese culture and consumer preferences and will likely therefore fail to satisfy European consumers. Also, methods used to integrate channels in order to convey a uniform brand image, offer augmented features such as warranties, and interact with the various channels, would similarly be based on Japanese preferences and the Japanese culture. Merely creating a more 'interesting' perception of Japanese brands does not sufficiently address existing negative associations with both Toyota itself and Japanese brands in general. Alternative #2 - Building Toyota as a Global Brand This strategy would consist of Toyota further positioning itself as a global player. Currently the Toyota brand has business relations with manufacturing, importers and dealers across the world. The adoption of a global and international strategy would involve the coordination of marketing activities world wide for Toyota Motor Company with an aim to appeal to commonalities across many different cultures. Initially, benefits would be reaped in economies of scale that would result from a stronger centralized approach to network development and work to drive down the cost of ownership. This marketing method supports fully integrating Toyota's activities as the intention behind this strategy is uniform, standardized execution in all respects. It would allow for value-adding customer-based services to be developed so as to increase customer satisfaction throughout the purchase-decision making process. Also, Toyota would have more control of supply and brand image in all regions that it operates, as the company's activities will be more fully integrated. Despite this, a completely global strategy fails due to its inability to establish brand appeal for customers with vastly different interests. Thus, similar to the Alternative #1, this strategy prevents TMME and TMC from appealing to local markets, particularly, European tastes. Under such a general approach, a singular message would be lost in reaching growing niche markets in Europe. In addition, a singular method of conveying this message would have an inconsistent effect on different consumers from varying cultures and communities. Ultimately, this approach would fail to address TMME's past inability to appeal to European tastes, which vary country to country even within the European market. Recommendation - Building Toyota as a Pan-Regional European Brand We recommend that TMME pursue a Pan-Regional market penetration strategy in Europe (see comparison - Exhibit 2). This will allow TMME to develop and execute a unified campaign while both effectively and efficiently targeting and satisfying the preferences of the local consumer. As a result, this initiative will enable Toyota to best capitalize on the European market by appealing to European wants and needs as never before. While Toyota will continue to pursue a cost reduction strategy, it will effect the most change by improving the value for money ratio. Through the use of value-adding activities specifically targeted to the local European consumer, the perceived value of Toyota vehicles will increase substantially by appealing to their preferences; thereby improving the ratio. This will optimize the cost-benefit relationship. Similarly, value-adding activities will increase customer satisfaction by directly addressing the wants and needs of European consumers. As seen in the Global strategy, it will be increasingly beneficial for us to integrate our actions and align our channels of distribution. Not only will we be better equipped to interact with local agencies, such as dealers, by being more open to and informed on the culture, but we will also be able to tailor our actions with them and through them more effectively to their market conditions, environment and culture. This will further increase customer satisfaction. Thus, any activities executed through dealers and distributors will add more value than either alternative because they will be best suited to consumer preferences. Furthermore, by repositioning our brand image to best appeal to European customers, we can not only produce a strong positive image, but increase brand control through the increased integration of our channels. TMME will reposition Toyota's brand as being friendly and intelligent in order to both retain aspects of its original identity while incorporating values such as ownership appeal and environmental friendliness, which are popular in European culture (Exhibit 8). Simultaneously, we will pursue a marketing campaign and create value-adding product augmentations to increase customer satisfaction. In order to focus our marketing activities, we will focus specifically on cultivating the medium, small high, small low/economy, and premium market segments (Exhibit 3). Further direction for our marketing strategy will also include increasing our presence in countries that we have little market share (yet considerable potential) as well as maintaining markets in which we are dominant in. Incentive programs and closer relationships with both distributors and dealers will enable TMME to execute these value-adding qualities and positively contribute to successful brand repositioning through increased brand control. Finally, these integrated activities will firmly reposition the Toyota brand and create a strong positive brand image that appeals to European consumers. Implementation Strategy Customer Focus The Toyota Motor Company in Europe does not possess a brand image that appeals to European tastes, nor does it work uniformly to satisfy customers needs prior to and following a purchase. Consumers must be made aware of our new customer focus and methods for ensuring their satisfaction. In addition, both these communications and these efforts must be standardized in order to create a strong brand image and quality service to consumers. By repositioning our brand towards being both friendly and intelligent, and by integrating our channels of distribution, we can work with dealers and distributors to convey a unified message to consumers, better encourage a purchase, and provide ongoing support to consumers. The creation of marketing campaigns will be outsourced to Saarchi&Saatchi. Their goal will be to firmly establish Toyota brand image in the minds of consumers, and closely link us with friendly and intelligent values in order to create greater ownership appeal and showcase our environmental consciousness (Exhibit 8). New value-adding features will reinforce our brand image and provide the customer with the same quality product and treatment throughout the decision-making process. Channel Alignment Implementation Strategy One of the main challenges in Europe lies in aligning Toyota's fragmented distribution channels in order to create a profitable corporate culture, a unified consumer message, and consistent quality service to consumers. TMME needs to motivate dealers to sell Toyota vehicles (Exhibit 5), encourage their sale volume by supervision and being supportive, and increase control and monitor through distribution process. This can be Dealer Incentive Program that rewards dealers for sales volume exceeding 300 units. Regional Representatives will also be employed to better communicate our strategy to both dealers and distributors. They will also play a critical role in coordinating our marketing activities across Europe between TMME, distributors and the dealers (Exhibit 6). In order to achieve a unified European message we will require that all TMME owned distributors as well as distributors in which we have a significant stake, utilize our own advertising campaign material. An increase in Distributor Control by acquiring stakes in independent Toyota distributors will further align our channels and enable us to establish a strong and more positively perceived brand image. Implementation to Meet Sales Objectives One of TMME's main objectives is to increase Toyota's European market share from 3% to 5% by 2005 at an average incremental market share increase of 0.333% per year for 6 years (Exhibit 4). To address TMME's sales goals of increasing volume and market share, Toyota will need to adopt the following short and long term strategies and evaluate progress over a three year period (Exhibit 7). In the short-term Toyota should focus on increasing volume by streamlining its product planning activities to push its car models in the most optimal market segments: medium, small high, small low/economy and premium. While MPV, SUV, Sports Utility and other niche markets, showed the highest growth rates, they also represented much smaller markets (see Exhibit 3). Toyota can further concentrate on pushing sales in Germany, Italy, UK, France and Spain - potentially large markets of which Toyota has the lowest market share in (see Exhibit 1). In 1998, these five countries together sold 11,487,000 cars with Toyota only responsible for a mere 247,500 (or 2.15%) of these. As part of the company's long-term strategy, TMME should strive to increase Toyota's production capacity in Europe as per the 1997 New International Business Plan. Asia and North America have both benefited from a greater number of manufacturing plants (Exhibit 5). Europe too will generate more sales if it increases its production capacity because manufacturing in the EU, as opposed to importing from Japan, will allow for penetration in an otherwise heavily protected market. Not only ...