Bho6505 Marketing Management | Market Assessment Answers

Tasks

1.The next stage of the marketing audit is for you to consider the market for your organisation and evaluate the opportunities and threats that exist for your chosen organisation.

1. Briefly describe the industry market for your organisation and evaluate current trends in:
2. Growth
3. Profitability
4. Macro environment ( PESTLE factor)

Introduction: 

Figure 1: Logo of Toyota

(Source: toyota.com, 2017)

1. Industry market of organization

1.1 Growth 

At the initial stage Toyota Motor Corporation has started their journey as an automobile manufacturer established their business process in the market of Japan. After providing variety of brands as well as services this specific brand has drawn the attention of large number of people by expanding the entire process of business in different geographical boundaries. By 2014 Toyota corporate structure has been constituted with 338875 employees (toyota.com, 2017). Sufficient workforce strength was effective for this brand in order to make a balance customers demand and supply. Wilson and Gilligan (2012) emphasized that, around 10 million vehicles is manufactured from the department of Toyota for delivering the brand.

1.2 Profitability  

As per the net revenue report of Toyota this particular company in 2016 has earned 59,011,306.09$ which is high in comparison to previous year (toyota.com 2017). In addition this specific business brand has decided to invest sufficient amount of money for business promotion (Armstrong et al., 2012). People belonging to different geographical boundary would like to show their interest in purchasing the products and services only when the brand draws the attention of customers. After making good promotional activities the business experts of Toyota have received the response from international customers as well. People belonging to different geographical markets have showed their interest after viewing the brand in various social media pages. As per the annual report of 2016, this specific brand in terms of revenue is the fifth largest automobile brand globally (Reza Jalilvand & Samiei, 2012). However, the marketing executives are currently interested in expand their entire process of business to other geographical boundaries as well. Promotional activities are the most effective ways of drawing the attention of customers.

1.3 Macro environment 

1.3 Macro Environment (PESTLE Analysis)

In order to maintain the competitive existence in the international ground, it is necessary for the company to exploit the market opportunities and threats. The influence of the political, economical, social, technological, and legal is the most significant concerns to be taken into account. The macro environmental analysis of Toyota through PESTLE tools is presented further.

Political

The political stability is the pragmatic opportunity for the business development in a competitive scenario. Toyota is subject to the political effects that determine the business sustainability. The Free Trade Agreements between Japan and other countries ensures the strict regulations on the company (Turi et al., 2015). This political regulations imposed on the automobile sector are sometimes affecting the production works due to which the company might face difficulties. Hence, the political stability is essential for the long-term survival.

Economic Factor

The current economic trends have been influencing the organizational development of Toyota. The Japan currency Yen has the weaker value than the US Dollar. Hence, when the company is internationally expanded, the revenues would be collected in dollars and it is a significant opportunity to ensure the economic growth (Barros, 2015). On the other hand, the eventual growth in the world economy is also opportune for the company for the long-term development. Due to the rapid growth in the developing countries, the company has the scope to increase the revenues through exporting business as well.

Social Factor

The socio-cultural factor has the significant impact on the business sustainability. It is observed that the company has become more successful in manufacturing the hybrid cars. Moreover, the increasing interests in the electric cars are quite favourable for the company to ensure the growing demands (Arvitrida et al., 2015). Considering such demanding factors, the company can easily recognize the market opportunity in the socio-cultural ground.

Technological Factor

The development of the advanced technologies is strengthening the competitive scenario in current times. The globalised world seeks for more innovativeness due to which the trends of the mobile technologies have considerably increased (Thompson, 2015). The company requires focusing on the development of this technological factor in order to remain competitive in this globalised business world. In fact, the commendable rise of the e-commerce use is quite opportune for the company to spread the brand awareness in a short span of time.

Legal Factor

The improvement in the intellectual property of the global business scenario is considered as the opportunity of the business in current situation. However, it is to be noted that the increasing number of the complex environmental as well as the consumer laws are sometimes imposing threats to the automobile companies (Chung Leng, Hamid and Bakar, 2014). Hence, the legal factors are quite concerning areas for Toyota.

Environmental Factor

Figure 2: PESTEL Analysis

(Source: Kapferer, 2012)

2. Major market segmentation of Toyota 

The business experts of Toyota have made STP analysis in order to segregate the target market. Kapferer (2012) opined that moderate price range is the USP of Toyota. While manufacturing the brand the product managers intend to focus on designing the brand in such a way that customers belonging to different level of income status can afford the product. However, target market has been segregated as per geographic, demographic and psychographic market segmentation.

• Segmentation:

While segregating the target market the business experts have focused on some of the geographic locations for targeting the customers. As per market segmentation structure the marketing executives have focused to decide the target customers as per three individual segmentations that are as follows:

Geographic segmentation:

As per geographic market segmentation Toyota business executives have primarily targeted most of the Asian countries so that the marketing managers can target both low cost customers as well as premium customers. As per the price range of this specific brand business executives have decided that Asian countries can be the best locations for Toyota to gain reputation and image of their brand (Luthra, Garg and Haleem, 2015). Among the Asian countries, India, China, Japan has been chosen as the best geographic location for promoting the business process of this specific brand. While choosing the geographic location the marketing executives have decided that Indian consumer behavior is suitable for purchasing different models of Toyota.

Demographic segmentation:

Demographic market segmentation is generally decided as per the age, gender and income status of the customers. While promoting the brand, the marketing executives have decided to focus on both male and female consumers from 20 to 40 age group of people primarily. While spreading the entire process of business to different geographic locations the income status of the individuals of those specific countries are highly significant (Bruhn, Schoenmueller and Schäfer, 2012). Toyota business experts have fixed a moderate price cost for their products so that people belonging to Asian countries do not have to struggle in order to afford the products as well as services.  

Psychographic segmentation:

Psychographic market segmentation believes that customers should be segmented as per psychological beliefs, their cultures and notion. As per the marketing strategy of Toyota the products should not be segmented in such a way that customers from a particular religious or cultural backgrounds show their interest in purchasing the brands (Ross, 2013). The product designs of Toyota ensure that customers belonging to different geographical backgrounds and attitudes are flexible enough in using the products due to its flexible service process as well as product variety.

• Target:

As already stated people belonging to different geographical attitudes and backgrounds belonging to Asian countries are flexible in using the products and services of Toyota. 20 to 40 age group of customers are primary target audience. The marketing executives of this specific brand have decided to choose Asian countries in order to draw the attention of both low cost customers as well as premium customers.

• Positioning:

Social media along with electronic media are the two primary vehicles with the help of which the marketing executives of Toyota have promoted their marketing campaign to different geographical markets (Wilson & Gilligan, 2012). In order to gather customers’ feedback regarding the various positives and negative aspects of marketing strategies the executives have used the popularity of social media platform as well as public forum.

3. Involvement of the Primary Segment

The strategic approaches undertaken by Toyota have created the significant impact on the psychographic segment of the market. It has been observed that the maintenance of the high quality and low cost products influences the customer purchasing behaviour. Similarly, Toyota maintains the differentiation strategy to produce the high quality car vehicles at a very lower range. Hence, it influences the psychographic parameter of the customers. The major motive of the company is to fulfill the customers’ demands by providing the unique and value added automobile products and services (Rothaermel, 2016). Therefore, while manufacturing the automobile vehicles, the company pays attention towards the distribution and the supply chain process. When the production costs are reduced, it would be helpful in minimizing the price of the vehicles as well. However, it is also necessary to gather the knowledge about the preferences of the customers. This concentration on the demands of the potential customers would lead the company towards achieving the psychographic segments.

4. Nature of the Competition

Analysis of the internal and external market influence provides the insightful knowledge about the nature of the competitive market. In this section of the study, the description of the competitive scenario faced by Toyota will be explained by understanding the external threats and opportunities. The further analysis is presented below:

4.1 SWOT Analysis

The description of the SWOT analysis interprets the underlying strengths and weaknesses of the company to measure the business potentiality for longer sustainability in a competitive market. On the other hand, the analysis of this strategic tool also presents the information about the market opportunities and threats to sustain in a globalised business scenario. The SWOT analysis of Toyota is presented below:

Table 1: SWOT Analysis of Toyota

(Source: Sindi and Roe, 2017)

The above analysis implies that in spite of the effective brand image and commendable competency skills, the increasing market competition has become the major determinant of the business. The current recalls from the customers have created the negative impact due to which it is quite difficult for the company to sustain the competitive position (Pisano, 2015). Moreover, the globalised business world seeks more innovations and advancements. The lack of adequate knowledge in maintaining these technicalities would be threatening for the future survival of the company. In addition to this, the increasing number of the competitors is also much challenging in current business situation.

4.2 Competitive Analysis

Toyota Motors has captured the leading position in automotive industry worldwide. It has been observed that the company has been selling the larger cards within the smallest continents of the world. On the other hand, the unique Lean Manufacturing Concept maintained by the company is the distinctive competency skill that is fruitful enough for participating in a competitive scenario (Parnell, Long and Lester, 2015). The major competitors of Toyota Motors are the Ford Motor Company, Honda Motor, and GM Holden. The customers are much inclined towards developed and advanced technologies while purchasing automobile vehicles. The competitors are also looking forward to develop the advanced techniques to draw the attention of the customers. However, it has been noticed that Toyota has ensured the stronger outlook for manufacturing high quality cars and strengthening the competitive position. The recognition of the continuous growth in the economic parameter signifies that the company has the considerable competitive values of sustaining the competitive position in the future scenario. In past few years, the financial performance of Toyota has signified the much commendable profitability to participate in the global competition level (Farhana & Bimenyimana, 2015). However, it has been observed that the changes in the currency value and the natural disaster are the most challenging factors for the company that may affect the brand value in a significant manner. In order to minimize such risks, it is essential for the company to develop the technological components that can lead towards accomplishing the business goals.

5. Positioning Map of Toyota

The use of the differentiation strategy has helped the company to sustain the competitive position in this globalised business world. The threats of the rivalries are still the major concern for Toyota. Therefore, the company has paid attention towards the low cost generic model apart from developing the differentiation strategy.

Figure 3: Brand Positioning Map of Toyota

(Source: Barros, 2015)

It is to be stated that Toyota is the successful automobile company to differentiate the unique value of the quality and designs. The maintenance of such unique values has led the company towards establishing the remarkable brand image. The company has established the entity by adopting the low cost leadership strategy with a proper control of suppliers (Dorota & Rymaszewska, 2014). The company manufactures the eco-friendly, innovative, efficient, and affordable vehicles that are quite demanding to the potential customers. In fact, the vehicles are quite easier to maintain than the other luxurious cars in the market. Hence, the company has captured the strong value positioning in the competitive market.

Conclusion

It can be concluded that the market competitiveness has the significant impact on the business in this globalised world. The major competitors of Toyota Motors are the Ford Motor Company, Honda Motor, and GM Holden. The company has the commendable competency skills of manufacturing the high quality automobile cars. It is much helpful in attributing towards the development of the production practices. Toyota has been maintaining both the low cost and differentiation strategies to sustain the competitive position. The influence of the external market is quite a considerable factor for the company for a longer run.

Reference List:

Armstrong, G., Kotler, P., Harker, M. & Brennan, R., (2015). Marketing: an introduction. Pearson Education.

Arvitrida, N.I., Robinson, S., Tako, A.A. & Robertson, D.A., (2015). An agent-based model of competition and collaboration in supply chains.

Atalay, M., Anafarta, N. & Sarvan, F., (2013). The relationship between innovation and firm performance: An empirical evidence from Turkish automotive supplier industry. Procedia-Social and Behavioral Sciences, 75, pp.226-235.

Barros, T.R., (2015). Applying value stream mapping as promotion of lean manufacturing in a warehouse of automotive replacement parts in the search for greater competitiveness. International Journal of Business Performance and Supply Chain Modelling, 7(2), pp.109-121.

Bruhn, M., Schoenmueller, V. & Schäfer, D.B., (2012). Are social media replacing traditional media in terms of brand equity creation?. Management Research Review, 35(9), pp.770-790.

Chung Leng, K., Hamid, A. & Bakar, A., (2014). A Study on the Factors Affecting Consumers Adoption Toward Environmentally Friendly Car-Hybrid Car. In Advanced Materials Research (Vol. 860, pp. 1129-1133). Trans Tech Publications.

Dorota Rymaszewska, A., (2014). The challenges of lean manufacturing implementation in SMEs. Benchmarking: An International Journal, 21(6), pp.987-1002.

Farhana, M. and Bimenyimana, E., (2015). Design driven innovation as a differentiation strategy: in the context of automotive industry. Journal of technology management & innovation, 10(2), pp.24-38.

Kapferer, J.N., (2012). The new strategic brand management: Advanced insights and strategic thinking. Kogan page publishers.

Luthra, S., Garg, D. & Haleem, A., (2015). Critical success factors of green supply chain management for achieving sustainability in Indian automobile industry. Production Planning & Control, 26(5), pp.339-362.

Parnell, J.A., Long, Z. & Lester, D., (2015). Competitive strategy, capabilities and uncertainty in small and medium sized enterprises (SMEs) in China and the United States. Management Decision, 53(2), pp.402-431.

Pisano, G.P., (2015). A normative theory of dynamic capabilities: connecting strategy, know-how, and competition.

Reza Jalilvand, M. & Samiei, N., (2012). The effect of electronic word of mouth on brand image and purchase intention: An empirical study in the automobile industry in Iran. Marketing Intelligence & Planning, 30(4), pp.460-476.

Ross, D.F., (2013). Competing through supply chain management: creating market-winning strategies through supply chain partnerships. Springer Science & Business Media.

Rothaermel, F.T., (2016). Competitive Advantage in Technology Intensive Industries. In Technological Innovation: Generating Economic Results (pp. 233-256). Emerald Group Publishing Limited.

Sindi, S. & Roe, M., (2017). The Evolution of Supply Chains and Logistics. In Strategic Supply Chain Management (pp. 7-25). Springer International Publishing.

Thompson, A., (2015). Toyota’s generic strategy and intensive growth strategies. Retrieved April, 27, p.2016.

Toyota.com. (2017). New Cars, Trucks, SUVs & Hybrids | Toyota Official Site. [online] Available at: https://www.toyota.com/ [Accessed 2 Sep. 2017].

Turi, A., Mocan, M., Ivascu, L., Goncalves, G. & Maistor, S., (2015), May. From Fordism to Lean management: Main shifts in automotive industry evolution within the last century. In MakeLearn International Scientific Conference on Management of Knowledge and Learning (pp. 25-27).

Wilson, R.M. & Gilligan, C., (2012). Strategic marketing management. Routledge.