Jul 10, 2020 in Economics Essays

Toyota Company Economics Essay Sample

Part A

Current Market Situation

Background information. Toyota Corporation is a Japanese automotive manufacturer that has its headquarters in Toyota, Japan. It manufactures different brands of vehicles throughout the world. The company is well famous following its management philosophy as the world’s first mass-market hybrids producer. The Toyota Land Cruiser has the longest running history among all Toyota cars. It originates from Toyota jeep Bj created around 1951. It came, as a result, from the demand for a military type vehicle similar to the British vehicle Land Rover series 1. In 1955, the brand Land Cruiser was used to release 20 series. Among them, there were three series they produced simultaneously; that is, the heavy-duty, wagon, and the light-duty vehicles. The Toyota Land Cruiser reached the UAE in 1951 as a Toyota version of a jeep-like vehicle (Hill & Jones, 2014). However, the 2017 model is an upgraded model that makes it comfortable even for the driver in the Middle East to travel through the desert. With the increase of the Toyota Land Cruiser production ever since they launched new model SUV last year, they have increased their sales by around 19 percent. This sales margin has increased the customer base, thus prompting the company to increase its product line. According to Al-Futtaim Motors, Toyota products include Land Cruiser pickups among others. The Land Cruiser division has improved its pickup  sales by almost 42.2 percent (Hill & Jones, 2014). The vehicle’s users find it convenient because it is reliable when one wants to carry a large amount of loads for a long distance without trouble. Also, the Land Cruiser model launched in 2016 has been offered with different engine choices so that it can accommodate different customer preferences. These engine types include 4.0L V6, 4.6L V8, and 5.7L V8. The modifications available include EXR, GXR, and VXR. These new models are available in all the Toyota showrooms in the United Arab Emirates.

Market environment. Business market environment is one of the factors that affect the company’s ability to build and maintain a successful relationship with its customers or clients. There are two levels of the environment including micro-environment, the factors within the company that affect its ability to serve customers. Additionally, there is the macro-environment, which entails the forces outside of the company that affect its ability to perform its functions effectively. All these types of environment can have either positive or negative impact on the brand existence in the market. Some of the micro-environmental factors include suppliers of the raw materials and components for the company. Toyota has well-organized supplier relationships and a distribution channels. It also has a very experienced person who is in charge of inventory. More so, Toyota has an outstanding manufacturing operation that has materials and registered control that makes sure the mechanized systems are trusted (Hill & Jones, 2014). Toyota Company has also market management that enables it to have successful communication and transactions with its customers. Apart from the customers, other bodies are also affected by the micro-environment, for instance, the finance, accounting, research and development, and competitors. On the contrary, Toyota experienced the effects of the micro-environment when the business and global car manufacturing procedures had changed. Toyota realized that its modification had to be operated in the state of the change in order to take full benefit of producing not only in UAE but all across the globe.

Consumer product. Toyota Land Cruiser is a series of four-wheeled vehicles produced by the Japanese Toyota Company. In 1951, the entity manufactured the first batch of Toyota Land Cruiser with its version that looked like a jeep (Hill & Jones, 2014). After that, the company produced it in many forms including the convertibles, station wagons, and cab chassis. As a result, it has gained its popularity, especially in Australia due to its longevity. When one has a Toyota Land Cruiser vehicle, some services come with it including several levels of service repair in their six departments. The repair has well-trained technicians and mechanics that have a range of experience in dealing with Toyota products. The latter have an advantage over other full-sized SUV in that it is more powerful with a 381 HP and 5600 rpm as compared to other with a 310 HP and 5100 rpm. Also, this vehicle has an additional airbag and an auxiliary audio pack (Hill & Jones, 2014). However, it also has its limitation in that it has a less cargo space and front seat space compared to other SUVs. Additionally, it has a poor fuel economy and premium brand price.

Market description and segmentation. The company released its first Toyota Crown in 1950 in Japan (Hill & Jones, 2014). The company was working first to organize its sales due to high demand. It, therefore, formed a strategy for foreign market called the Land Cruiser strategy. They decided to venture into the foreign market by selling the Land Cruiser passenger cars. The company proceeded to expand into the foreign market by making several improvements and modifications. It led to the increase in production of their models leading to higher export channels. Toyota Land Cruiser customer base is higher in the Middle East. It is mostly preferred over other cars since its design meets the safety and emission regulation around the world. It also has a solid front axle, and the brand name of Land Cruiser is still valued than the LX badge. However, the customers prefer the one with features like front collision avoidance, the pedestrian detection of a blind spot system, and the rear cross traffic warning system. Also, they need good entertainment system and an off-road detection system. 

Market segmentation is the market strategy that involves the one dividing the whole broad market reach into a set of consumers with the same needs and preferences. Marketing segmentation of Toyota car users is based on the care for them, and it can be clearly seen in its products’ attribution. Currently, it is concentrating on two major segmentation types, namely demographic and psychographic segmentation. Demographic segmentation is targeting the families and the income of the middle and the upper-class people. Toyota want these groups of people to buy such models as the Land Cruiser, Prado, and Camry since the company believes these people have the will and the buying power. In the psychographic segmentation, Toyota targets people of high class as it believes they have the capacity to buy models like SUV, sedan, and MUV since they have a sporty appearance. Toyota also uses different products and prices for various market segments. For instance, the company developed Land Cruiser and 4Runner for the sport utility class.

Primary Research

Performing primary research led to a deeper understanding of the customers’ opinions concerning the market mix of the Land Cruiser products. About one hundred individuals responded to the various survey questions. The areas that the questionnaire addressed are included in the Figure 1 below.

 Toyota Company Example Essay

Figure 1. Areas of the questionnaire.

Customers’ Current Needs and Wants

About 70 people showed interest in the available Land Cruiser design. The remaining percentage wanted further adjustments.

Potential Changes to Customers’ Needs and Wants

 30% of the sample needed Toyota to ensure that Land Cruiser met the current technological needs.   

Existing Market Segments

60% of the population accepted the existence of the market segmentation; hence, not all people could afford Land Cruiser. The remaining 40% had no problem with the segmentation. Moreover, 20% represented high class, 50%  – middle class, and 30% – lower class. 

Potential Changes to Existing Segments

50% gave positive answer, 40% – negative, and 10% did not form their opinion. 

Potential New Segments

This condition remained promising in the UAE since many young people have money. 80% of the respondents accepted such shift with 20% saying no. 

Customer Psychographics

The survey tested the customers’ attitudes regarding Land Cruiser. Those with positive attitude totaled to 75% with negative remaining at 25%. 

Customers’ Buying Behavior

The consistent Land Cruiser customers were about 62%, 18% could opt for other brands, and 20% were not necessarily Toyota customers. 

 

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Part B

Market Opportunities

Toyota has some growth opportunities that include improving the safety and comfort of its vehicles. The company can increase the specifications for the safety consciousness. This move can be effective if Toyota consider its large clients in Australia, where more women and elders are increasingly driving cars. Thus, the company can increase measures that cater for the underprivileged. It can further develop the environmentally friendly technologies due to the emerging concerns about the sustainability of the environment around the globe. Toyota should, therefore, manufacture such cars that have low carbon emissions as hybrid or electronic cars. It can also integrate modern technology into the cars so that the company stay updated with the current technologies, some of which include the GPS programs and the Smartphone capabilities (Hill & Jones, 2014). Thus, from the market information, one can deduce that for Toyota Land Cruiser to increase its sales, it needs to be current with the newest technologies and know its target customers well, particularly those who are from high class in their market grid. After the research, the market information showed that the product has been in the market for several years; thus, there is no need to venture into new market segments. The company has already segmented its customer base, and Toyota should determine its preference and modify products to satisfy its customers’ needs. 

Application of Marketing Mix

Toyota marketing mix reflects its strategy to relate to the target market. Its target market can be consumers’ preferences or regional and local market conditions. Its effectiveness can come in implementing its marketing mix. 

Proposed product. Toyota’s products mix can be organizational output for the targeted consumers. Its product line includes the Toyota Land Cruiser automobiles, engines, spare parts, and accessories. However, the automobiles are the most popular. The products such as the Welcab series are modified so that they benefit the elderly. It has a diverse product mix like the engines that make the company to reach further to the markets. The marketing mix of Toyota includes the place where the customers can access the company’s product that they require (Hill & Jones, 2014). 

Proposed price. The product line and model makes its products to vary widely in their prices. It uses market-oriented pricing strategy so as to determine the market price condition of its competitors and the value-based pricing with high end or expensive products such as sedans.

Proposed place. The main aspects in Toyota distribution strategy are dealership and retailers. The transaction occurs in the dealership where Toyota is confident most of the time about its targeted market. 

Proposed promotion. Promotional mix includes personal selling, advertising, and public relations. This market mix determines how the company relates to its customers. 

Recommendation

Paying attention to all the aspects discussed above, that is product, place, promotion, and price, one should consider each of these factors to have a product success in the market. This move would enable the company to achieve its objective of reducing and meeting its production cost and appealing to the targeted audience, therefore increasing its profit.

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