The enclosed paper will explore some issues drawn from secondary research that have implications for the growth on Toyota company. The issues are divided into “problems”, and “Recommendation ”.
The first of these problems is the sudden acceleration issues that have been occurring over the past few years with some of Toyota's cars have done much to undermine the company's sterling reputation for quality. These issues have also undermined the trust that the consumer had in the company as well as led to a devaluation of its products which harms consumers yet again because trade-in values have plummeted for Toyota products. Finally, Toyota's handling of the situation has been the subject of much ridicule as well because has done nothing but attempt to deny that a problem exists and then only came to acknowledge them first as floor mat problems and then as mechanical issues in the gas pedal and finally it is being revealed that the real issue is likely the company's electronics. Toyota failed at the very strategy that gave the company its competitive advantage as “Quality” . The evidence that Toyota was losing the sight of its core values.
Another problem of Toyota recall related to safety and reliability harm the foundation of the brand. This is not a peripheral quality issue such as a radio that breaks. The problems, while very rare, are potentially life threatening.
The final problem addressed is that The second biggest actors of the pollution in the world are the car manufacturers, if Toyota did not manage business with respect to environmental and social sustainability, the business will not be sustained due to there were increase of consumers who prefer green product
The first is the use of
Toyota Motor Corporation, better famed as Toyota, took off as a spinoff venture of the founder automobile company Toyoda Automatic Loom Works, in the year 1937, under Kiichiro Toyoda. Since then, it has been one high ride for this automobile manufacturing company. Based in Japan, the company has its headquarters in Toyota City, Tokyo and Aichi. Toyota is celebrated as world's largest automaker, largely because of it stupendous sales record. It also owns and operates Lexus and Scion brands and has a majority stake in Daihatsu and Hino Motors, Fuji Heavy Industries, Isuzu Motors, Yamaha Motors, & Mitsubishi Aircraft Corporation.
Toyota is one of the world's largest automobile manufacturers, selling over 9 million models in 2006¹ on all five continents. A Top 10 Fortune Global 500² enterprise, Toyota ranks among the world's leading global corporations and is proud to be the most admired automaker³, an achievement the company believes stems from its dedication to customer satisfaction. Toyota has been shaped by a set of values and principles that have their roots in the company's formative years in Japan.
This section will discuss some of the problems that will affect the company in the next decade.
Toyota's problems with sudden acceleration are well-known. In order words, Toyota has long been an icon of quality and efficiency in terms of its production and manufacturing standards.
According to my finding, Toyota Motor Corporation's product liability for unintended acceleration and braking problems, which has reportedly led to 10 million recalls and counting, would eventually be found to be manufacturing and/or design safety defects.
From the reported accounts of several accidents involving sudden acceleration and brake failure, the safety defects may, hopefully for Toyota, be limited to accelerator-pedal trapping floor mats, sticking accelerator pedals, and inconsistent anti-lock brake systems (ABS), and not include defective electronic throttle control systems (ETCS) or stirring systems, on Corollas, Camrys, and other Toyota models.
Toyota's global recalls have included Prius and Lexus hybrids, which indicate that the safety defects related to unintended acceleration and braking problems are systemic in nature. 134 cases were part of 15,000 or so auto-related problem cases brought to the regulators' attention between 2007 and 2009.
Japan's government has also interfered that it would investigate 38 previously reviewed reports of unintended acceleration by Toyota Motor cars in Japan in response to the concerns over the company's safety record.
Toyota has apparently known about the accelerator problem since 2007. And in a Bloomberg report, Henry Waxman, chairman of the U.S. House of Representatives' Energy and Commerce Committee, said that sudden acceleration of Toyota vehicles has been linked to 19 deaths in the last decade. It certainly appears that the company has reacted slowly to the problem - not a good thing in terms of crisis management.
Lazer (1971) stated that product is the most important aspect of marketing mix for two main reasons. First, for manufacturers, products are the market expression of the company's productive capabilities and determine its ability to link with consumers. So product policy and strategy are of prime importance to an enterprise, and product decisions dictate the scope and direction of company activity. Moreover, the market indicators such as profits, sales, image, market share, reputation and stature are also dependent on them. Secondly, it is imperative to realize that the product of any organisation is both a component and a determinant of the marketing mix as it has a great influence on the other elements of the mix: advertising, personal selling, channels of distribution, physical distribution and pricing. So without proper product policy, a company can not pursue for further elements of marketing mix.
Lazer, W (1971), 'Marketing Management: A Systems Perspective' New York: John Wiley & Sons
Toyota's Recall Problems Illustrate Risks of Brand Erosion
Brands play an important role in modern society. A role which cannot be denied in scope and scale.
Toyota is the top selling U.S. auto brand with a whopping 17 percent market share. Moreover, it has built its brand on quality. In fact, the massive recall has forced Toyota to pull its first-ever national “Portfolio” campaign that, ironically, promotes its cars' “dependability,” “safety” and “reliability,” according to the Wall Street Journal. It was planning to use the open media time to push the Prius brand, but now that its top-selling hybrid is experiencing brake problems, it may have to rethink that strategy.
The one-two punch of the accelerator problem and now, the Prius's brake problems, makes it almost impossible for consumers to view this as a “one off” problem. It will therefore be perceived as a systemic issue, a blow to a brand whose value is based largely on “quality.”
Already reeling from the effects of the economic crisis, Toyota in 2009 announced a record $4.6 billion operating loss on revenues of $263 billion. Its U.S. stock is already down over 20 percent in just two and a half weeks - a loss of over $30 billion in market cap. The financial impact of a brand meltdown, at this juncture, would be enormous.
Customer Satisfaction with Toyota has certainly been impacted with this widespread quality problem. Toyota and other Japanese automakers have long enjoyed a well-deserved reputation for manufacturing high-quality automobiles. Brand names like Toyota and Honda are synonymous with customer satisfaction, and the American public is shocked at Toyota's meltdown. Toyota has placed the blame for sudden unintended acceleration on faulty pedals and obstructive floor mats.
The biggest challenge for Toyota is among its potential buyers—those who have never purchased a Toyota but have considered doing so in the past. Research showed that 52.6% of potential buyers will no longer consider buying a Toyota in the future. Among consumers who have recently purchased Toyotas, opinions regarding future purchases are mixed.
This section will discuss on how the company can use a range of marketing tools and techniques to either embrace or combat those issues that will affect its success.
Toyota should develop animation videos illustrating key technical problems and how they might be fixed or they also able to include blog posts.
Then webcasts from Toyota assembly lines and dealerships showing fixes being made. Toyota will learn an enormous amount tracking which explanatory links were clicked. It should treat the recall process as an opportunity to learn more about the kind of information, explanation, and communications its customers crave. These little innovations aren't difficult or expensive; they're easy and insightful. Toyota should bring its famous principles of "just in time" and "lean manufacturing" processes to the digital process of recall, making it clear to the world that Toyota is visibly listening to its core constituencies. Rebuilding trust is as important as conveying the latest facts.
Toyota needs to rebuild the trust consumers used to have in its products. Conducting a recall is the bare minimum required to rebuild that trust. The company should consider taking additional steps to encourage consumers to stick with the brand. This might include giving away free services to consumers to encourage people to bring in affected vehicles for timely recall repairs. An extension of the factory warranty would also represent a forceful action.
You can hardly pick up a business newspaper today without reading of the demise of the big Detroit automakers at the hands of Toyota. But what exactly is behind this success?
A large part of the answer is Toyota's obsession with its customers. Toyota's internal sales and marketing bible, The Toyota Way in Sales and Marketing, makes it patently clear to all staff that totally satisfied customers is the source of its success. Everything Toyota does is done with this in mind.
But in what may be surprising to those who believe a manufacturing strategy doesn't work in a customer-centric environment, I would argue that a good measure of Toyota's success is a strategy that manages to straddle both manufacturing and non-manufacturing environments. It's one called Lean CRM, which was developed by Toyota in Europe, in response to the growing volume of customer information collected at the many touch-points during the customer lifecycle. It allows Toyota to sense changes in individual customers' behavior and to respond in a way that increases customer satisfaction. It has enabled Toyota to sell significantly more vehicles, with a shorter trade cycle and higher repurchase rate, at significantly lower costs.
A typical European customer will own a new vehicle for three to eight years before replacing it. Toyota's process guides how different touch-points over the customer lifecycle are delivered and how to employees should respond to customer-initiated touch-points and deliver Toyota-initiated ones.
This process starts when the customer is just thinking about buying a new vehicle, with Toyota's marketing. The marketing guides prospective buyers to the Toyota web site, where they can learn more and request further information. Requesting information is an example of "customer pull," where Toyota responds directly to the customer. It is the first point at which the customer becomes known to Toyota, and it triggers a check to see if Toyota already knows the customer. What the company already knows about the customer guides how future touch-points to that customer are delivered.
As Toyota guides the customer through the purchase process, the auto company uses what it knows about the customer to provide just the right information that Toyota leadership thinks will help him or her make the right choice. This is an example of "smart Toyota push." In addition to more vehicle information, Toyota might send out a customized offer, maybe even a pre-approved credit offer if the customer's credit record with Toyota is good. Statistical models are widely used to help identify which customers should have which information pushed to them. Where models are not available or not appropriate, simple data analyses or Toyota best practices are used, instead.
As the customer buys his or her new Toyota and enters the ownership lifecycle, Toyota uses every opportunity to sense customer pull and to respond to it—and to push exactly what it thinks the customer wants, exactly where it's wanted, exactly when it's wanted. It is this combination of pull and push that guides each customer step by step during the customer lifecycle and toward the customer's next purchase. It is the backbone of the lifetime conversation between the customer and Toyota.
The heart of Toyota's Lean CRM is "Customer DNA." Just as real DNA influences how each individual develops, looks and responds to his or her environment, Customer DNA controls how each touch-point between the customer and Toyota during the customer lifecycle is carried out. It defines each touch-point—most likely a contact or a campaign—that a customer is likely to have with Toyota, whether initiated by the customer or by Toyota. The touch-point trigger, the touch-point delivery process, previous or subsequent touch-points, the roles and responsibilities involved and the business rules that control how the touch-point is executed are all contained within the touch-point definition. The touch-points appropriate to each customer—which make up that person's Customer DNA—are assigned to them as soon as the customer is identified.
Toyota implements the touch-points through the Unica Affinium campaign management system (CMS). Using an industrial-strength CMS like Affinium is the only way to manage the variability of customers, the different touch-points and their implementation.
A regular process automatically reviews what is known about each customer and decides whether a touch-point should be triggered. If more than one touch-point is appropriate at the same time, it also decides which one has priority and what happens to the other. For example, an update of customers who have had recent service from a dealer will trigger the review process. For those who were due to be sent an inspection reminder but had the inspection recently, the reminder will be cancelled. And the mileage at the last inspection will be used to calculate when the next reminder should be sent out.
Similarly, if the customer requests information about a new model, the request will automatically trigger a review process to identify the best touch-point and which touch-points should be triggered as a follow-up.
As Toyota introduces brand new touch-points, such as a new Customer Driver Club, all Toyota has to do to update the Customer DNA is to define the touch-points associated with the Club, how they interact with existing touch-points and the membership rules for the club and then enter that data into Affinium. The next time a review is triggered, the new touch-points will be there along with the pre-existing touch-points.
Social media provides businesses the platform to speak out to their customers and involve them in a direct discussion. This is the space that Toyota can use to express what they are doing to fix their problems as well as their thoughts and allow customers to vent and receive a timely response. Most businesses come up against challenges and obstacles. How they deal with it is determines what they are made of. Toyota can use social media to let its customers know that they are working hard and diligently to make things right. They can also let them know that they ‘the customers' are the people who are the most important to the company.
Customer service goes a long way in developing loyal and deep customer relationships. It is important for customers to know that they have not been alienated and the brand they trusted and depended upon has the courage to accept its mistakes, repair them and move forward. Toyota can use social media to offer responses and views in real time. Customer service can be upgraded to a whole new level with social media applications that can help Toyota reach out and have a dialog with their customers, potential customers, news organizations, in essence basically anyone that will listen. Fortunately Toyota recently is now moving in a positive direction pointing to a stronger social media team to come.
Over the last years, we have noticed some changes in the population amongst product
manufacturers and consumers. Indeed, the whole society feels more than ever
concerned by a new phenomenon which was first discovered by Joseph Fourier in 1824,
first reliably experimented by John Tyndall in 1858 and first quantitatively reported by
Svante Arrenhius in his 1896 paper (Weart, 2007). The phenomenon mentioned here is
known as the “Greenhouse Effect”. People have been talking about ever since it has
been proven that it could have dreadful consequences for the planet Earth. Implications
like a notable climate change, a global warming which could be disastrous for the
vegetation, the oceans, the wild life... (Held and Soden, 2000).
The second biggest actors of the pollution in the world are the car manufacturers, mostly by the use that the consumers do of their
products. The cars are responsible of 10% of the CO2 released in the atmosphere.
Indeed, the exhausts represent 80% of the total amount of pollution created by a car
(FEBIAC, 2008). A car is a complex product. It is the result of a combination of more than
1500 pieces, produced in many different materials like steel, PVC, aluminium... (FEBIAC,
2008). The actual constraints for car producers are to propose an attractive product for
people and at the same time to develop this one in accordance with all the rules, rules
that we notably find in the domain of security and environmental legislations (FEBIAC,
Therefore, Toyota need to react fast on the environment pollution.
Integration of Green Marketing within the Automotive Industry
A strong commitment to environmental sustainability in product design and manufacture can yield significant opportunities to grow the business, to innovate, and to build brand equity.
Toyota Prius the most successful "green" product in the US.
It provides consumers with all they seek in a sedan and more—attractive styling, fuel efficiency, the ability to drive for an unlimited amount of miles only stopping for fill-ups (versus, for instance, having to stop for a 12-hour recharge if the engine were only electric), and because of the hybrid engine, a quiet ride, since the car doesn't idle at stoplights.
The car's dashboard comes with an unusual feature: a screen that lets the driver know which of the two engines is in use and how efficiently fuel is being used at any given moment; according to anecdotes, Prius owners try to beat their previous record each time they drive!
When the car was introduced, ads focused on superior performance evidenced by a quiet ride, and supplemental ads touted its environmental bona fides. With energy prices on the rise, the Prius is now being marketed for its superior fuel efficiency, and a PR machine fuels efforts to link the car to environmentally conscious celebrities and causes. Some owners, it is reported, even buy the car for what is being called "Conspicuous Conservation"—letting all know that they are environmentally astute.
They are designing a completely solar-powered car...though they intend to cheat a bit.
Nikkei explains that following their first operating loss in 70 years, Toyota wants to make an aggressive move in the market with a solar car. But to make it work with current solar efficiency, some of the car's energy comes from solar panels on the vehicle, but some of the energy also comes from solar panels on one's house. (Does that imply it'll plug in to the wall as well, sans solar?)
According to the report, Toyota also hopes to release a real 100% solar car (not needing the house part) in the future. And we hope so, just to watch all those haughty Prius owners be usurped. [AP via Jalopnik]
The purpose of this analysis was to Identification of key recommendations detailing how the company can use a range of marketing tools and techniques to either embrace or combat those issues that will affect its success. Indeed through the analysis it appears that Toyota have to adopt in order to success in the business.
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