Case Analysis of Toyota: Driving The Mainstream to Purchase

Hybrid Electric Vehicles

About case
Toyota is a large international automobile manufacturer with plans to become a largest
worldwide automaker striving for 15% global sales. Toyota is committed to becoming the leader
of the hybrid-electric automotive industry is relying on changes in the industry and customer
perception to bring its plan fruition. Toyotas challenge is to develop customer attitude and
purchase intent from an early adopter.

The automobile industry and market

In 1960, the auto industry has undergone dramatic transformation.

In 1965, import manufacturer held slightly more than 5% of us market share.
In 2001, environmental concern about global warming and the fear of us dependence on
foreign oil.
The technology for engine components is evolving towards cleaner, more efficient car.
The gasoline-combustion will not meet future environmental demand.
New and different technologies that will change the way of people to travel in future.
By 2003, the industry changed and developed from model T to clunky, fuel guzzling
muscle cars to fuel efficient small cars of the 70s and 80s to sport utility vehicles (SUV)
of today.

About the company

The Toyota motor company was first established as spin-off Toyoda automatic loom
works a leading manufacturer of loom machines.
Headed by Saki chi Toyoda, who sold the patent rights to one of his loom machines in
1973.
In 1957, Toyota made the first move into American, with introduction of the Toyopet
Crown. But it failed.

Objectives of company

Attain leadership in HEV segment

Evolve HEV technology from niche to mainstream
Increase acceptance of HEVs

New technologies and industry

Satisfy the needs of the customer and meet the stringent environmental legislation of the
future.
Provide an opportunity to the manufacturer reinvent and revitalize the auto with
disruptive technology win market share and revenues
New technology:
Fuel-cell technology
Pure electric vehicle
Hybrid electric vehicle

1. Fuel cell technology: had long to go it challenges with reliability and durability, power
output, cost efficiency and the ability for the manufacturer to mass produce.
An electrochemical energy conversion device that converts H2 and O2 into H2O,
producing electricity and heat.
Works like battery can be recharged while drawing power from it.
Engine is water eliminating all pollutants from process
.
2. Pure electric vehicle:
Cars that run on a battery and as a result have zero tail pipe emission.
Though many manufacturer have sold and leased EVs but many of them have
discontinued.
Limitation EVs are lack of power, long time charger, cold weather issue, and
challenges with the existing infrastructure.
3. Hybrid electric vehicle
Hybrid: An electric motor gas or diesel powered engine = increased fuel efficiency and lower
emission.
What best:
1. Better gas mileage.
2. No obstacles with extreme weather condition.
3. Not require any infrastructure changes.
Study found that hybrid technology is better for environment. Use less fuel and emit less CO2
than fuel cell model.

Toyotas competitive advantage

Toyota production system (TPS), as a part of the TPS company utilized just in time production
system that was designed as a pull system as opposed system push system of mass
production.
Just in time helped in reducing operating cost

.
It allowed Toyota to be flexible and fast in making changes to production system of
vehicles.

Toyota hybrid technology

The 2004 Toyota Prius:
5 passenger sedan, could reach speed up to 100mies/hour, achieve 0-60 mph in 12sec, more
power and more comfort.
2003- Estima introduced in japan.
2005 -Lexus rx330 hybrid sport utility introduced.
2005- 300,000 Toyota hybrid vehicles sold in US.
2012- All Toyota vehicles in US available with hybrid technology.

Toyotas planning
Challenges- to service the vehicles.
Planning
Fulfilled hybrid electric service needs
Preparing and training its service technicians at all dealership in servicing the Toyota HEV
models.
Promised that every Toyota car, truck and SUV was covered by limited warranty coverage.

The competition
HONDA is the strongest competitive threat to Toyota because it produces two HEV and had the
ability to adopt the technology into its manufacturing plans.
But dont have any plan to add more gasoline electric EVs to its products line because the
company did not want to sacrifice short term profit.
As a result Hondas product plan did not include aggressive pursuit of disruptive HEVs
technology, rather it planned to maintain its leadership in the segment to meet short-term profit
goals.

FORD introduces the first SUV HEV, the Ford escape in 2005.

GENERAL MOTORS introduce a Saturn SUV and Chevrolet full-size, pickup truck in 2004.

Toyotas challenge: moving up the bell curve

The challenge: develop a strategy to turn the hybrid technology from a niche market product to a
mainstream acceptance.
To move up the bell curve required creating awareness about the product and building a
strategic advantage over traditional cars and trucks.
Toyota plan to give what they wanted.

Advertising and marketing

The Prius had a fully integrated marketing plan with an emphasis on internet and web
advertising.
The initial strategy targeted early adopters by showcasing the intelligence of the new
technology in a web-based marketing campaign.

Potential customer survey

90% would consider buying the hybrid version of current vehicle.
75% somewhat to very informed.
Average buyers was a fairly well-off, educated, baby boomer.