Marketing Policies & Strategies Project

BMKT 490
Fall 2015/2016

Done By
Mohammad Rayya 21330568
Natalia Mtawea 21330698

Supervised By Dr. Georges Karouni

Lebanese International University

Lebanon
Bekaa Campus
Contents
History ..................................................................................................................................................... 3
The Mission and Vision Statements ........................................................................................................ 4
Vision:.................................................................................................................................................. 4
Mission: ............................................................................................................................................... 4
Analysis: .......................................................................................................................................... 4
Toyota Values.......................................................................................................................................... 5
Toyota’s Product Portfolio ...................................................................................................................... 5
Situational Analysis ................................................................................................................................. 6
Core competencies ............................................................................................................................. 6
Distinctive Competency ...................................................................................................................... 6
SWOT Analysis..................................................................................................................................... 6
Strengths: ........................................................................................................................................ 6
Weaknesses: ................................................................................................................................... 7
Opportunities: ................................................................................................................................. 7
Threats: ........................................................................................................................................... 7
Segmentation: ......................................................................................................................................... 8
Positioning .............................................................................................................................................. 8
Differentiation......................................................................................................................................... 9
External Environment Analysis ............................................................................................................... 9
 Political ........................................................................................................................................ 9
 Economic ..................................................................................................................................... 9
 Social ......................................................................................................................................... 10
 Technology ................................................................................................................................ 10
Competitors .......................................................................................................................................... 10
Toyota’s “Marketing Mix” ..................................................................................................................... 10
Products (Product Mix): .................................................................................................................... 10
Price: ................................................................................................................................................. 11
Place: ................................................................................................................................................. 11
Promotion: ........................................................................................................................................ 12
Value Chain Analysis ............................................................................................................................. 12
1. Inbound logistics. ...................................................................................................................... 12
2. Operation. ................................................................................................................................. 12
3. Outbound logistics. ................................................................................................................... 13

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 4. Marketing & sales. .................................................................................................................... 13
5. Service. ...................................................................................................................................... 13
Conclusion ............................................................................................................................................. 13
Illustration sales graph .......................................................................................................................... 14
References ............................................................................................................................................ 15

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History
Toyota Motor Corporate is a Japanese automotive manufacturer headquartered in Toyota,
Aichi, Japan. In 2013 the multinational corporation consisted of 333,498 employees
worldwide and, as of January 2014, is the fourteenth-largest company in the world by
revenue. Toyota was the largest automobile manufacturer in 2012 (by production). In July of
that year, the company reported the production of its 200-million vehicles.

Until the early 1980s, Toyota met foreign demand by exporting CBU 1 and CKD2 vehicles.
But as the sudden increase in exports led to increased trade friction and as economic
conditions grew more volatile, Toyota started full-scale efforts to produce its products
overseas.

Sales overseas grew stagnant in the second half of the 1980s due to a sudden appreciation of
the yen. By 2000, however, overseas production far exceeded CBU exports, and with the
successful launch of a number of region-specific models, sales overseas expanded, hitting its
peak at over 6.8 million units in 2007.

Impacted by the global recession that started to unfold in autumn 2008, sales in 2009 dropped
by over 900,000 units from the previous year to a total of 5.6 million units. Still, overseas
sales in 2009 accounted for more than 80% of Toyota's total sales, a significant increase from
the 50% levels of the late 1980s. (Toyota Global )

In 2011, Toyota, along with large parts of the Japanese automotive industry, suffered from a
series of natural disasters. The 2011 Tōhoku earthquake and tsunami led to a severe
disruption of the supplier base and a drop in production and exports. Severe flooding during
the 2011 monsoon season in Thailand affected Japanese automakers that had chosen Thailand
as a production base. Toyota estimated to have lost production of 150,000 units to the
tsunami and production of 240,000 units to the floods.

1 Completely Built Up
2 Completely Knocked Down

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 .

The Mission and Vision Statements

Vision:
“Toyota will lead the way to the future of mobility, enriching lives around the world
with the safest and most responsible ways of moving people. Through our commitment
to quality, constant innovation and respect for the planet, we aim to exceed expectations
and be rewarded with a smile. We will meet our challenging goals by engaging the talent
and passion of people, who believe there is always a better way.” (Toyota Global Vision)

Mission:
“Create vehicles that are popular with consumers.” (Toyota Mission for Technologies)

Analysis:
In the vision statement, Toyota includes major areas of its business. it states that the
company aims to achieve leadership in the global market. It also shows that Toyota moves
forward based on quality, innovation and environmental conservation. Thus, Toyota includes
corporate social responsibility in its vision statement. In addition, the company emphasizes
human resource development, as shown in the “talent and passion of people” component of
the vision statement. Therefore, Toyota’s vision statement is holistic because it includes
strategic goals for business leadership, product quality, human resources, and corporate social
responsibility.

Toyota’s mission statement focuses on products. The firm always considers the preferences
and expectations of consumers; Toyota emphasizes quality of products, with reference to
such criteria as safety and customer satisfaction. In addition, Toyota’s mission statement
specifies employee education as a way of achieving the human resource development aim in
its vision statement. Also, this mission statement shows that Toyota maintains its
commitment to technological innovation. Innovation is seen as a way for the company to
achieve its aims in product quality, customer satisfaction, and corporate social responsibility.
Thus, Toyota’s mission statement is holistic and aligned to its vision statement.

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 Toyota Values
The "Five Main Principles of Toyoda" are a written statement of the teaching of Sakichi
Toyoda the Founder of Toyota Group. (Toyota Global)

- Always be faithful to your duties, thereby contributing to the Company and to the overall
good.

- Always be studious and creative, striving to stay ahead of the times.

- Always be practical and avoid frivolousness.

- Always strive to build a homelike atmosphere at work that is warm and friendly.

- Always have respect for spiritual matters, and remember to be grateful at all times.

Toyota’s Product Portfolio

High Market Share Low Market Share

High market growth Star Question mark

Lexus- luxury sedans Scion – for youth in USA

Prius hybrid Camry / Corolla – as hybrids

Land Cruiser SUV Bio –fuel, Solar –powered , hydrogen gas

Diesel engine cars for India, Southeast Asia

Small cars for India / China

Low market growth Cash cow Dog

More SUVs and MPVs : Fortuner

Camry , Corolla sedans Celica , MR2 -for youth

Innova , Venza –MPV Tundra –pick-up

Daihatsu -small cars Crown, Cressida, Corona, Quails: Withdrawn

Declining markets in UK, Europe

Petrol cars to be phased –out

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Situational Analysis

Core competencies
The core competence of Toyota Motor Corporation is its ability to produce automobiles of
great quality at best prices, thereby providing a value for money to the customers. This core
competence of quality can be attributed to its innovative production practices. The quality
aspect of Toyota’s products have revolutionized the automobiles in the past and almost all the
automobile companies had to try and better the quality of their products. It is a cornerstone of
the cost leadership strategy that the company pursues.

Distinctive Competency
Toyota’s distinctive competence is its production system known as the “Toyota Production
System” or TPS. TPS is based on the Lean Manufacturing concept. This concept also
includes innovative practices like Just in Time, Kaizen, and Six Sigma and so on. Toyota has
worked tirelessly over the years to establish this distinctive competence. No other automobile
manufacturer can do it as well as Toyota does. This distinct competence has led to a
competitive advantage that has given Toyota a sustainable brand name and a market leader
position. (Toyota Production System)

SWOT Analysis

Strengths:
The company is one of the world's best known brands with their experience which cannot be
overemphasized in the terms of manufacturing. Strength is that their product list is diverse
with wide variety of segments for the customers to choose from which could fit their lifestyle.
They are the moving assembly line pioneers which made their production very affordable as
well as faster and efficient. The company's international exposure makes the company the
second largest automaker in the world.

Toyota also uses low cost to try and gain a competitive advantage in the automotive industry.
“Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its cost
leadership strategy by adopting lean production, careful choice and control of suppliers,
efficient distribution, and low servicing costs from a quality product.”(Michael E. Porter)
This quote from Michael Porter sums up how Toyota achieves this low cost strategy

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Weaknesses:
Toyota’s main weaknesses are as follows:

 Hierarchical organizational structure

 Secrecy in organizational culture
 Effects of product recalls in recent years

Toyota’s global hierarchical organizational structure prevents maximum flexibility of

regional operations. Also, the company’s culture of secrecy is a weakness that reduces
response times in addressing emerging problems. In addition, Toyota implemented massive
product recalls starting in 2009. These recalls weaken the firm because the recall processes
consume business capacity that could be used for product distribution instead.

Through the interview with the Sales Manager of BMUC Company, he told us that one of
their weaknesses was both of Toyota And Lexus cars has the same maintenance garage in
Beirut Hazmieh Branch, but now they separated each one to its maintenance garage.

Opportunities:
Toyota Company according to their corporate responsibility to be environment friendly, made
the opportunity to keep cleaner engine emissions. They further had a chance of create a great
image in the public with the help of environmental group works in order to keep the
environment clean. There is one great viable prospect for the company where they already
started investing in solar power. The company has a chance to regionalize and specialize their
worldwide operations which could enhance their transnational linkages. The company's
existing innovations capabilities on automobiles will make them have an opportunity to make
good scope in the market other than the competitors.

Threats:
Very tight competitive rivalry is being running in the automobile industry and so Toyota
faces the same as any other organizations. The company is also affected by risks of prices
change of the raw materials like fuel, rubber, glass and steel. The economies in the Pacific,
Europe and US are also showing slowdowns. Analysis shows that these are active threats to
the company financially. Foreign competitive activities have been largely been affected by
the company due to the overall position in the industry worldwide.

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Segmentation:
How do Toyota Choose its Customers “Target Market”?

The STP3 of Toyota cars is based on the "care" of its users and it can be clearly seen in its
variety of offers and product attributes.

Currently Toyota is focusing on two segmentations:

 Demographic Segmentation
 Psychographic Segmentation

In the first segment of Demographic, Toyota has targeted the family size and in this segment
people of Upper Middle High Income group is kept in view by Toyota. Land Cruiser, Parado,
Camry is some major cars of this segment which are designed for those who have the
willpower and buying power to purchase these cars.

In the second segment of Psychographic, Toyota has targeted the family size and in this
segment people of the high class, a high income group who have sporty attitude, is kept in
view by Toyota such as Toyota Altis Sport model and Toyota Fortuner. These sports cars that
helps in improving and exhilarating their sense and passion for sports. SUV4, MUV5 and
Sedan are its examples

Positioning
Toyota’s uses both differentiation and low cost as generic strategies to try and gain a
competitive advantage over their competitors in the automotive industry. The market scope
that Toyota uses is a broad one that encompasses nearly every type of customer that is in the
market to purchase an automobile. Toyota is able to target such a large market because they
have something for everyone. Toyota has four wheel drive trucks and SUVs for the outdoor
types or those who live in areas that face severe weather conditions, hybrid models like the
Prius for the eco-friendly customers that are interested in saving the environment, along with

3 Segmentation, Targeting, Positioning

4 Sport Utility Vehicle

5 Multi-Utility Vehicle

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the standard cars for general, everyday use. Additionally, Toyota provides vehicles for all
price ranges. From the low price Toyota Corolla line of cars to the high priced luxury line of
cars and SUVs with Lexus, Toyota has something for everyone.

Differentiation
Toyota differentiates on several levels form their competitors. First of all, Toyota has been
very successful in differentiating on the basis of superior design and quality. This has led to
Toyota being able to create a brand image that is very strong and one that brings to mind
quality, long lasting cars when a potential customer sees it. The strength of Toyota’s brand
image has been seen in recent years with the recalls and problems Toyota faced in dealing
with these recalls. Toyota was able to survive these problems because they had such a long
and proven track record of quality and superior. Another, area that Toyota differentiates is in
technology. Toyota was the first successful mass produce the hybrid car on the market when
it released the Prius in 2003. Being the first to get their hybrid on the market allowed Toyota
to gain a large portion of the market share in the area of hybrid cars.

External Environment Analysis

There are many causes that affect the macro environment concern with automotive industry.
Analyzing the external environment, the PEST framework is used as tools to consider major
factors, which affect the business and to create key driver of change. This can identify
influential effects in each area, which can consider key success factors of company.

 Political
This factor is most related government policy such as taxation policy and trade tariff.
Because manufactures import some vehicles and parts from other countries, firms
need to pay for the tariff for buying. Costs of products will be increase, if government
increase import tariff. This is the challenge that company faces fluctuation of cost.

 Economic
Economic growth affects spending of people by changing buying power, for example,
the economic crisis impact decrease of salary, increase of unemployment that people
are difficult to buy products because they have less income.

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  Social
Some people select to buy products since they can reveal the social status of
consumers and some people are still reputation in brands. Moreover, the trend of
family structure has changed and customer needs will be different. Toyota has not
only positioned itself in middle market by using the Toyota brand but also launched
Lexus for luxury brand which firm has wide range of product.

 Technology
Technology is one of the important factors of environmental impact on organizations,
technologies change quickly while companies have invested in research and
development to respond needs. Innovative technology can provide more opportunities
in particular energy conservation issues such as fuel consumption and alternative
energy technology.

Competitors
Toyota faces strong competition from all angles, and is facing a very tough market from other
Japanese, American, South Korean and German auto manufacturers. Toyota is working hard
to set itself apart from the competition in more than one way, however. Since Toyota
products have a reputation for reliability, the added value of their vehicles after sale tends to
be much higher than many other producers. The most serious threat to Toyota is widely
considered to be Honda Motor Company. However, Toyota has done some substantial work
on their products and price points to stay competitive against Honda.

Toyota’s “Marketing Mix”

Products (Product Mix):

Toyota has a diverse set of products. This element of the marketing mix identifies
organizational outputs for the target customers. The following are the product lines in
Toyota’s product mix:

 Toyota automobiles
 Lexus automobiles
 Welcab series
 Marine products

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  Spare parts and accessories
 Engines

Toyota automobiles are the most popular in this product mix. Lexus automobiles are luxury
products from the company. On the other hand, the Welcab series are Toyota automobiles
modified for the elderly and people with disabilities. The company also manufactures yachts,
engines, and spare parts and accessories for automobiles and marine products. This part of the
marketing mix shows that Toyota reaches a wider market and reduces market-based risks
through a diverse product mix.

Price:
Toyota’s prices vary widely, depending on the product line and the product type or model.
This element of the marketing mix identifies how the firm sets the prices of its products.
Toyota uses a combination of the following pricing strategies:

“Market-oriented pricing, Value-based pricing”.

Toyota uses the market-oriented pricing strategy to determine prices based on market
conditions and the prices of competitors. This pricing strategy is notable in the vast majority
of Toyota products, such as sedans and trucks. However, the firm also uses the value-based
pricing strategy, which sets prices based on the actual and perceived value of the product.
The company uses value-based pricing for high-end or more expensive products, such as the
Prius and Lexus cars. This part of Toyota’s marketing mix shows that the company
determines price levels based on market conditions and customers’ perceptions

Place:
Dealerships are Toyota’s main places for distributing its products. This element of the
marketing mix determines the venues where customers can access the firm’s products. The
following are the main places in Toyota’s distribution strategy: “Dealerships, Retailers”

Toyota dealerships are where most sales transactions occur. However, some retailers like auto
supply stores also sell the company’s products, such as spare parts and accessories. This part
of the marketing mix shows that Toyota relies heavily on dealerships to sell its products to
the target market.

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Promotion:
Toyota’s promotion strategy covers all the tactics of marketing communications. This
element of the marketing mix pertains to how the firm communicates with the target market.

Toyota uses personal selling through dealerships’ sales personnel, who personally promote
products to potential buyers. The company also uses advertising on various media, such as
TV, newspapers, and websites. In addition, the firm promotes its products through public
relations, such as the Toyota TogetherGreen program that supports environmental initiatives,
and the Meal Per Hour program that donates food to Food Bank. These public relations
activities create a positive brand image for Toyota. On the other hand, infrequent sales
promotion is used through special deals. Also, the company sometimes uses direct selling
for corporate clients. This part of Toyota’s marketing mix indicates that the company has a
comprehensive strategy for promoting its business and products.

Value Chain Analysis

Porter Identifies five primary activities that add value to the final output of the company, the
following is an analysis of Toyota’s Value chain:

1. Inbound logistics.
This is where goods are received from a company's suppliers and stored until they are
needed on the production/assembly line. When it comes to obtaining raw materials,
Toyota doesn’t process their own, or create their own, they use a third party. They
purchase their raw material from all around the world and in order to maximize their
availability of raw material, they maintain good relationship with their suppliers.
Toyota use JIT (Just in Time) approach for handling of raw material.

2. Operation.
This is where goods are manufactured or assembled. Toyota uses various systems to
be efficient and effective which is the Toyota Production System (TPS). The system
includes JIT (Just-in-Time) Management that regulates the production process in
accordance with customers' requirements and Jidoku system that automatically stops
the production process if any defects and other operational problems appear.
Operational Stability is also a part of TPS and consists of: Heijunka concept - the
uniform distribution of work at any places of production process; Standard Work -
organizing the work in the right order and with its description; TPM (Total Productive

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 Maintenance) the overall check up of all equipment that is involved in the production
of the products; and Value Chain which is a series of value-added processes. (Toyota
Production System)

3. Outbound logistics.
Where goods are now finished, and they need to be sent along the supply chain to
wholesalers, retailers or the final consumer. The company makes sure that the
products are delivered in the right place and at the right time. The cars are directly
sent to the dealers or if distributed overseas, Toyota uses containers, waterway
transportation. They also manage their own Showrooms in different countries.

4. Marketing & sales.

Where the company's marketing department allocates the finished goods i.e. new
products to the targeted group of customers. This area focuses strongly upon
marketing communications and the promotions mix. Toyota Production System also
makes it possible for the company to use indirect distribution channels, dealers and
distributors.

5. Service.
This includes all areas of service such as final checking, after-sales service,
complaints handling, training and so on. Toyota always tries to meet the customer’s
needs and requirement and try to continuously improve their services. The main factor
for Toyota Company in providing services is their reliability. Services are provided by
qualified personnel of the company. As a result, trained workers, good service and
reliable products become a guarantor of Toyota’s success among its competitors and
help to meet customers’ expectations. This activity can be reflected from their well-
known philosophy ‘Customers First’.

Conclusion
Today Toyota is the largest carmaker in the world with about 9 million car sold around the
world. The backbone of their success being their sharp well thought and excellently
implemented strategies. It yielded excellent result over the years it brought them to the No. 1
position and if it maintained, there is no doubt about the fact that they’ll maintain their
position for years to come.

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Illust
ratio
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sales
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References
Toyota. (n.d.). Retrieved from http://www.toyota-
global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_vol
ume/overseas/index.html.

Toyota Global. (n.d.). Retrieved from http://www.toyota-

global.com/company/history_of_toyota/75years/data/conditions/precepts/index.html.

Toyota Global . (n.d.).

Toyota Global . (n.d.). Retrieved from http://www.toyota-

global.com/company/history_of_toyota/75years/data/automotive_business/sales/sales_vol
ume/overseas/index.html.

Toyota Global Vision. (n.d.). Retrieved from Toyota Global: http://www.toyota-

global.com/company/vision_philosophy/toyota_global_vision_2020.html

Toyota Mission for Technologies. (n.d.). Retrieved from Toyota Global : http://www.toyota-
global.com/innovation/vision/mission.html

Toyota Production System. (n.d.). Retrieved from Toyota global: http://www.toyota-

global.com/company/vision_philosophy/toyota_production_system/

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