FACULTY OF BUSINESS STUDIES

Jeddah Branch

TMA Cover Form (PT3)

Academic Year 2009/10 - First semester Course #: BE 200
TMA No: 01

Course name: Principle of Marketing

Mark Allocated to TMA: 30 % of the total semester mark

Part (I): STUDENT INFORMATION (to be completed by student) 1. Name: Syed Bilal Ali Rohailla 2. Registration #: 20707771 3. Section #: 21012001 4. Tel. : 0548789992 5. E-mail: s_bilal24@hotmail.com I confirm that the work presented here is my own and is not copied from any source. Student's signature: Bilal Rohailla.. Part (II): TUTOR'S REMARKS (to be completed by tutor) Tutor name: Signature: Date TMA received: Date returned: TUTOR'S REMARKS:

TUTORS SIGNATURE __________________________ Branch __________________

1) Discuss Toyotas key factors of success. Define segmentation as explained and identify the various segmentation strategies used by Toyota based on relevant examples from the case study Segmentation at its core refers to dividing something into segments or smaller groups / portions. In business terms it is mostly referred to the act of dividing a market of buyers into specific groups so that they can be targeted more efficiently, this is called market segmentation. There are various ways to segment a market. A marketer has to try different combinations to find the best way of viewing their market. Any given market can be segmented into 4 major segments, being: Geographic - division in terms of countries, cities, states, regions, etc Demographic - referring to age, gender, religion, race, nationality, income, occupation, etc. Psychographic - division based on social class, lifestyle or personality characteristics) Behavioral - division based on consumer knowledge, attitude and use or response to a product. [1] When Toyota Motor company started manufacturing in the 1930s the world was facing a depression, caused mostly due to the wall street crash of 1929. Considering the circumstances in which Toyota was born it has come a long way to become one of the leading manufacturers in the market today. Its success is based on becoming an innovator with the introduction of environment friendly cars like the Prius. When marketing the Scion, Toyota targeted first time buyers, which are usually teenagers and undergraduate students. They strategized using demographic segmentation to determine the age, income and culture and mixed it with psychographic segmentation which focused on the lifestyles and values of money [2]. Over a period of 4 years pre-launch of the Scion, Toyota researched these segments to find the interests of their buyers lied in customization of their cars. They also marketed the Scion based in the events enjoyed by the young generation instead of placing in dealerships where the targeted age group might feel uncomfortable exploring.

2) The purpose of Societal marketing Concept is to maintain society's long-term interests. Explain the principles of this concept and illustrate relying on lectures how it is applicable to the Toyota case? Societal marketing is a concept that entails a company to consider three main aspects 1) Customer wants and needs 2) Company requirements 3) Consumers and societies long-term interests This concept is not always an easy one to follow. In most cases the consumer wants coincide with consumers and societies long term interests, however consumers do not always want what is good for them. Examples include cigarettes; people want to smoke despite knowing the consequences to their own health and to the health of those around them.

The above diagram shows how products can be classified in relation to their consumer benefit and immediate satisfaction. Salurtary Products products that are high in consumer benefits however low in their immediate satisfaction. (Gyms are low in desirability but beneficial for the consumer in the long run) Deficient Products these are products that are both low in satisfaction as well as benefits. Marketers work hard to avoid producing these kind of products. (Faulty products) Desirable Products these include products which are both high in benefits as well as satisfaction Pleasing Products these are products such as alcohol and cigarettes which are high in satisfaction but are unhealthy in the long run. If marketers have to follow this concept then they can be left with a dilemma. Therefore societal oriented marketers strive to develop products that are both pleasing and beneficial. [1] Such a dilemma was faced by Toyota. Cars being a pleasing product; they decided to produce the Prius, a car for the environmentally conscious. The Prius runs both on gas and electricity, therefore reducing the amount of carbon dioxide released into the atmosphere. This product fell into being desirable as it was a complete package. It offered fuel economy, performance, comfort and most of all helped reduce your carbon footprint.

3) What are the key Marketing challenges faced by Toyota? Toyota has been juggling a number of models under its own name as well as the name of Lexus, the more luxurious cars aimed at upper class citizens. Over the years it has had to overcome various marketing challenges to work its way towards the top next to Ford & GM. One of the key challenges was educating the market about the Prius. The Prius uses electricity generated by the battery as well as gas to power the car and it was vital to educate the public that the car did not need to be plugged into a socket to be charged. Toyota chose to do this by constantly reminding customers that the Prius did not have to be plugged in through its commercials. With the Prius it also had to make consumers believe that the car was produced with the aim of preserving the environment and not to lower fuel costs, that part was just a bonus that came with the cause. It did this by stating that the Prius is a leap forward in technology. [3] Regarding Lexus, their main tagline is passionate pursuit of perfection. Perfection has different meanings all over the world so although the tagline is the same, Toyota had to advertise very differently in various countries. In the US, a perfect vehicle might be viewed to be a fuel efficient, spacious and heavy duty car where as in the Middle East; the perfect car must be luxurious as well as give above average performance. Since gas is fairly cheap in most parts of the Middle East, fuel economy is not that big a concern.

4) What recommendations would you make to senior marketing executives to help develop a successful Marketing strategy? Begin by defining Marketing strategy and give your arguments by focusing on Marketing mix tools. When devising marketing strategy the key is to find the right mix between the Geographics, Demographics, Psychographics and Behavioral characteristics of the target market. Focus also has to be made on the 4 Ps, being Price, Place, Product and Promotion. Toyota has been manufacturing, assembling and marketing their cars in Pakistan, which is a slow growing 3rd world country, for about 20 years [5]. It has introduced limited models in the market the most selling of which are the Coure and the Corolla (low and mid-priced cars). Considering the densely populated country is suffering from major amounts of pollution, most of which is caused by traffic. On average 90% of the air pollution is accounted for by traffic. Sky rocketed fuel prices combined with the lack of control over vehicular emissions make the Prius an excellent candidate to introduce to the market. Being an environmentally friendly car with high mileage and of a low to mid-range price the Prius in Pakistan has the equation of success. Taking a brief look at the demographic data, the majority of population is between 15-64 years of age, meaning that the majority of population is employed and earning [4]. Due to the overwhelming fuel prices people are forced to look for alternative means of power, the most popular of which is CNG (compressed natural gas). This fuel source is also rapidly inflating and has almost reached the same price as petrol. If Toyota was to educate the public to the option of saving the environment as well as lowering fuel costs, similarly as they have done within the US market, it will prove to be profitable. Production cost would also not be a drawback since they have already been manufacturing Pakistani made Corolla and Camry; their production factory is already set up.

References
1. Philip Kotler, Gary Armstrong, Veronica Wong, John Saunders (2008). Principles of Marketing. 5th ed. Essex, England: Pearson Education Limited 2. Loveleena Rajeev. Market Segmentation Strategy. Available: http://www.buzzle.com/articles/market-segmentation-strategy.html. Last accessed 20 Nov 2010. 3. ikondrat (2007). Toyota Prius Commercial. [online]. [Accessed 21 Nov 2010]. Available from: <http://www.youtube.com/watch?v=3Mlffr3e5P4>. 4. CIA World Factbook. (2010). Pakistan Demographics Profile 2010. Available: http://www.indexmundi.com/pakistan/demographics_profile.html. Last accessed 20th Nov 2010. 5. Indus Motor Company Ltd. (2005). Available: http://www.toyota-indus.com/. Last accessed 21 Nov 2010.