Toyota Motor Corporation is one of the leading motor vehicle manufacturing firms in the world. The company is involved in the development, sale, and distribution of motor vehicles. Headquartered in Toyota City, Japan, the organization has expanded its operations across different parts of the world, including Asia-Pacific, Middle East, Europe, North America, Africa, and Latin America (Toyota Corporation, 2017). Currently, the company is one of the most expanding geographically, having established its subsidiaries and outlets in over one hundred and ninety countries scattered across the planet. Toyota is not only one of the leading motor vehicle firms, but it also tops the list of companies that have the most diversified vehicles. Toyota has developed three business segments through which it sells and distributes its products. They include: Automotive, Financial Services, and All Others. Out of these products, Toyota Prius is one of the most fuel-efficient vehicles manufactured by the company. Toyota Prius is increasingly gaining popularity as a car for the middle class population in the United States and other parts of the world (Toyota Corporation, 2017). The development of this new vehicle was driven by the desire to offer value to customers who not only seek eco-friendly vehicles, but they also need to cut costs associated with the skyrocketing gas prices and met their desire for state of the art technologies.
Market Segmentation of the Product
Market segmentation can be described as the process of subcategorizing the total market for a specific product or service into smaller units that have the same needs, such that each group is most likely to respond favorably to a particular marketing strategy (Longnecker et al. 2010). Toyota Prius mainly uses three segmentation strategies to reach out to its target audiences: geographic, psychographic, and demographic segmentation. Demographic segmentation subdivides markets into components that are based on their demographic factors such as age, gender, level of income, level of education, as well as occupation (Ferrell & Hartline, 2012). From a demographic sense, Toyota Prius seeks to reach out to both males and female customers who are aged 16 years and beyond. Another important demographic characteristic that Prius uses to reach out to its customers is level of income and education. In particular, the product mainly targets middle class population who can afford to raise approximately $24000 to $30000 to buy the motor vehicle (Toyota, 2017). This vehicle is ideal for the middle class population that is grappling with a lot of bills since it is cost saving. The vehicle is cheaper than the average by approximately $1200 (Toyota, 2017). Its eco-friendly and fuel-efficient nature also makes it ideal for middle-income populations that are affected by the constantly rising fuel prices.
Toyota Prius also employs geographic segmentation as a tool to serve consumers in different specific areas. From a geographical sense, the product that employed a wide geographical segment approach to marketing. In almost all parts of the world, the question of developing a sustainable environment is increasingly gaining relevance in local and international discourses. This is particularly true to regions such as the Indian subcontinent, which has one of the highest levels of green house gases emissions in the world. Other areas that have the potential to purchase this product include China and the United States, which are currently facing the uphill task of cutting carbon emissions brought by fossil fuel-dependent motor vehicles (Toyota, 2017). The geographic segmentation strategy that Toyota Prius employs is also in line with the overall geographic segmentation model that Toyota Company employs. For instance, Prius is sold in almost all store outlets that Toyota vehicles have in all parts of the world. These include Japan, North America, Europe, Asia, and Africa. (for my class, we discuss Synchographics instead of geographical segmentation. Synchographics means life event based (birth, teenager, graduation, household formation, marriage, childbirth, retirement, death)
Further, psychographic segmentation can be defined as a segmentation strategy that deals with the state-of-mind issues such as motives, perceptions, attitudes, views, values, lifestyles, interests and customers’ personality traits (Ferrell & Hartline, 2012). While these psychographic variables may be hard to measure, there some that are relevant to Prius’s marketing agenda. They include opinions, interests, and values. For instance, some customers’ values are related to their need to be socially responsible in terms of protecting the environment. These customers are most likely to be attracted to Toyota Prius as their ideal motor vehicle in line with their environmental value and principles. From lifestyles perspective, some consumers like to purchase state-of-the art technologies. These are especially true for innovators, who are heavy consumers of latest products and technologies (Toyota, 2017). They are often sophisticated in nature and have a taste for upscale and innovative products and services. Innovators can enjoy Toyota Prius because they are concerned about their personal image as an expression of the self, but not as an expression of status or power. Some of the features found in this vehicle that can attract innovators include smart-flow climate control systems with pollen filtration, and an integrated backup camera.
Toyota Prius is one of the most fuel-efficient cars that do not have a plug. The product is not only cost effective, but it is also spacious and comfortable. Its comfortable cabin and assortments of smart tech amenities makes it ideal for customers who seek prestigious vehicles. In 2017, the product was ranked by many environmental analysts as one that has surpassed the Environmental Protection Agency (EPA) estimates for fuel economy. This is because Prius has managed to deliver 59 mpg, coupled with over 500-plus miles of testing. The product has a new rear suspension that boosts comfort and driveability. The product I has an available suite of driver support technological systems that include automatic parallel parking and a well sorted adaptive cruise control system.
Toyota has used diversification strategy to improve the competitive status of Prius. This is a corporate level strategy that is utilized to improve an organization’s strategic competitiveness and increase returns both of which serve the interests of all stakeholder groups. Diversification also generates tow major benefits for an organization (Toyota, 2017). One reason why managers prefer diversification is the fact that it has the potential to increase the size of an organization and size is strongly associated with high return on investments and profitability. More specifically, the organization has opted for diversification because it generates synergy impacts, market power advantage, and internal efficiency and portfolio impacts (Castellani et al. 2018). By diversifying Prius into different product lines and segments, the company is able to access cheaper resources, acquire foreign knowledge, and realize economies of scale. Prius has been diversified into various product lines. They include Prius Two Eco, Prius Three Eco, Prius Four, and Prius Three and Fiur Touring (Toyota, 2017).
The average price of Toyota Prius is approximately $30000. There are two pricing strategies that have been used to arrive at this price. They include market-oriented pricing and value-based pricing. The organization uses these two pricing strategies to define the prices on the basis of the market conditions and the prices of rival products such as Tesla. The value-based strategy is also employed by the organization on the basis of the perceived value of the product. The organization uses this strategy for more expensive Prius models (Toyota, 2017). Value-based pricing strategy is commonly used by Toyota as a way to target customers who seek prestige and image for their products. This strategy seeks to set prices artificially higher in order to promote positive exceptions amongst buyers, based solely on the price and the value that they get following the purchase decisions that they make.
Prius mainly utilizes dealership as its distribution strategy. They are the organization’s main outlets for the distribution of its products and services. Apart from dealers, Prius products can be found in Toyota retailers. Toyota dealers are intermediaries that are most commonly used by the organization to facilitate the transaction of Prius products, including its spare parts and accessories. Distributors and dealers are the preferred channels for the spread of the organization’s products and services to different parts of the world. The distributor is often a wholesaler who is involved in the direct sale of the company’s products to the public. The relationship between distributors and Toyota has many characteristics that are found in franchises, including laws and regulations that govern franchises.
There are various promotional strategies that Toyota uses to persuade, inform, and encourage target customers to buy Prius. They include personal selling, advertizing, public relations campaigns, as well as direct selling. The company utilizes personal selling via its dealers’ sales representatives, who personally participate in the promotion of Prius products o prospective clients. The organization also utilizes advertizing in an effort to create awareness to prospective customers on the latest features and brands of Prius. Examples of advertizing channels include television, print media, websites, billboards, as well as social media platforms. The organization also promotes the purchase of Prius with the utilization of public relations campaigns. Public relations can be defined as a planned and sustained effort to establish and maintain mutual understanding and goodwill between an organization and its publics. Public relations campaigns are mainly utilized when the company seeks to address issues such as customer complaints about faulty Prius spare parts and any defects that might have been detected by the client. Further, the organization occasionally uses direct selling mainly to reach out to corporate-level clients.
The political environment of Toyota Prius’s market influences the sale and performance of the product in such areas. The international automobile sector is affected by many political variables that affect the sale and distribution of automobile products and accessories. They include political stability, lobby groups, geopolitical tendencies, and policies. Toyota is affected by direct effects of political events in many instances (Law, 2017). For instance, the company is affected by poor relationships between Japan and China. In addition, countries that witness political protests, civil unrests, labor strikes, and political tensions often register poor sales of Prius products. Protests are not also favorable for business environments because people are always on the run.
The state of global and local economy affects customers’ purchase decisions. This is particularly true for Prius, which mainly targets prestigious customers. During times of economic recession, the sale of premium products often declines significantly as customers resort to austerity measures that seek to cut costs. Economic factors such as rate of inflation, currency exchange rates, macroeconomic situation in the country, and labor costs may affect the operation of an organization and the revenues that it generates (Law, 2017). In areas where labor costs are high, the company is most likely to register low profitability. In addition, the currency exchange rate fluctuation is a big economic variable that exerts direct impacts on Toyota’s revenues. For instance, Toyota’s operating income has been steadily improving after benefiting from a 900 billion yen boost as a result of the weakening Japanese yen against both US dollar and Euro. Furthermore, the company is affected by high inflation rates that affect India, which is one of the leading global destination and market for Prius product. Economic factors also affect businesses that operate within the sector as a whole, thereby having a domino effect on the sale and distribution of Prius products.
Culture and social factors can affect the sale and preference for the product. There is a increasing consumer awareness about the dangers of environmental degradation and the need to promote sustainability (Thoburn, 2016). This can serve as an opportunity for Prius, because its product strategy is based on the need to promote environmental sustainability. Toyota has taken the initiative to respond to this changing social lifestyle of people by focusing on electric and hybrid Prius cars. Aging is another major demographic factor that has major impacts on the number of Prius vehicles that are sold. Toyota is also strongly affected by other social variables such as shifts in family values, changes in consumer behaviors and attitudes, as well as popular opinions and views towards automobiles and travelling.
There are various technological factors that affect the competitive nature of Toyota Prius. Technology and innovation impacts Toyota Prius especially because people are in search for innovative and creative ways of addressing social problems such as environmental pollution and faster and accident-free transportation. The main technological factors that affect Toyota’s competitive environment include the rising utilization of e-commerce, the emergence of mobile technology, as well as cybersecurity. The emerging use of e-comemrce presents an opportunity for Toyota since it can now directly sell its products to customers through the click of a button. However, cyber crime threatens to affect the company in terms of leakage of Toyota Prius’s intellectual property and trade secrets.
Toyota is one of the leading motor vehicle manufacturing companies in the world. The company has not only established its operations in different parts of the world, the world, but it has also embarked on product diversification strategies to meet different consumer needs. One product that has been developed out of this program is Toyota Prius, which is environmentally sustainable and creates value to customers. This product presents an opportunity for Toyota, which is currently affected by tough regulations on carbon emissions.
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