CHAPTER-1 INTRODUCTION

COMPANY PROFILE

The Headquarters of Toyota in Toyota City, Japan

1

ASSEMBLY PLANTS OVER THE WORLD

Toyota has factories all over the world, manufacturing

or assembling vehicles for local markets, including its
most

popular

model,

the

Corolla.

Toyota

has

manufacturing or assembly plants in the United States,

Australia, Canada, Indonesia, Poland, South Africa,
Turkey, the United Kingdom, France, Brazil, and more
recently India, Argentina and Czech Republic. Toyota
also builds and sells cars in China in a joint venture
with Tianjin Xiali. Toyota New Zealand assembled
vehicles until 1998, when it switched to importing cars
from Japan and Australia. Cars from these plants are
often exported to other countries.

Toyota Car Model:

Innova

Camry

Avalon

Matrix

Corolla

Prius
3

Trucks:

Tacoma

Tundra

Vans:

4runner

Land cruiser

Overview
In 2006, Toyota was engaged in a variety of projects
designed to solidify its foundations while continuing to
grow. On the product front, Lexus launched its new
flagship model, the LS, and the new global Camry went
on sale. In Japan, a new Corolla range was introduced,
emphasizing the importance of this best-selling car.
In manufacturing, several new projects were started
around the world. In May, manufacture of the Camry
began in Guangzhou, China, while in the United States,
the Kentucky plant, which in October celebrated 20
years of production, started manufacturing the first
Toyota hybrid vehicle to be made in North America, the
Camry Hybrid. In November, the Texas plant began
producing the new Tundra truck, a key vehicle in
Toyotas North American lineup. In Japan, Toyota
Motor Kyushu, Inc. began full-scale operations at its
engine factory, while Toyota Motor Tohoku Co., Ltd.
increased its manufacturing capacity.
In human resources development, following the
establishment of the Asia Pacific Global Production
Center in Thailand in August 2005, Toyota established
the North American Production Center in the U.S. in
February, and the European Global Production Center
in the United Kingdom in March. Established as
branches of the Global Production Center in Japan,
5

these were created to spread Toyotas manufacturing

knowledge and skills throughout the world in pace with
the rapid growth of Toyotas overseas manufacturing.
The centers educate trainers for local manufacturing
plants in all regions, with trainees passing on what they
learn to team members on their return to their plants.

In R&D, Toyota focused its efforts on three key areas:

environment, safety and energy. It made a special effort
in the area of the environment by expanding its lineup
of hybrid vehicles, and has worked on R&D relating to
plug-in hybrid. In addition, as part of Toyotas efforts to
respond to the diversification of energy, in 2007 Toyota
plans to introduce a flex fuel vehicle* in the Brazilian
market that will run on 100% bio-ethanol fuel. From
this point on, based on the philosophy of providing the
right car, in the right place, at the right time, and in
accordance with the infrastructure and customer needs
of each region, Toyota will continue to promote efforts
to develop environmentally friendly technology and
vehicles.

Corporate Data:
Company Name Toyota
Head Office

Motor

Corporation

1 Toyota-Cho, Toyota City, Aichi Prefecture 471-8571, Japan

Phone:

(0565)28-2121

Tokyo

Head1-4-18

Koraku,

Bunkyo-ku,

Office

Phone:

Nagoya Office

4-7-1 Meieki, Nakamura-ku, Nagoya City, Aichi Prefecture

112-8701,

Japan

(03)3817-7111

450-8711,

Japan

Phone:
Establishment

Tokyo

(052)552-2111

August 28, 1937

Since its foundation, Toyota has conducted business with contributing to the
development of a prosperous society through the manufacture of automobiles as a
guiding principle. When I became president two years ago, I called on all employees to
work with me in returning to our origins and asking earnestly whether Toyota is truly
contributing to society and whether we are doing everything we should be doing. On
the occasion of Toyotas 70th anniversary, we will reinforce our measures designed to
return to our core principle, which is to "repay the earth and society through
technological innovation (and contribute to enhancing the quality of life everywhere

Guiding Principles
Honor the language and spirit of the law of every nation and undertake open and fair corporate
activities to be a good corporate citizen of the world.
Respect the culture and customs of every nation and contribute to economic and social development
through corporate activities in the communities.
Dedicate ourselves to providing clean and safe products and to enhancing the quality of life
everywhere through all our activities.
Create and develop advanced technologies and provide outstanding products and services that fulfill
the needs of customers worldwide.
Foster a corporate culture that enhances individual creativity and teamwork value, while honoring
8

mutual trust and respect between labor and management.

Pursue growth in harmony with the global community through innovative management.
Work with business partners in research and creation to achieve stable, long-term growth and mutual
benefits, while keeping ourselves open to new partnerships.

Toyota Percepts
Be contributive to the development and welfare
of the country by working together, regardless
of position, in faithfully fulfilling your duties.

Be at the vanguard of the times through endless

creativity,

inquisitiveness

improvement.

and

pursuit

of

 Be practical and avoid frivolity.

Be kind and generous; strive to create a warm,

homelike atmosphere.

Be reverent, and show gratitude for things great

and small in thought and deed.

Board of Directors
Chairman

and Fujio Cho

Representative Director
Vice

Chairman

and Katsuhiro Nakagawa

Representative Director
President and Representative Katsuaki Watanabe
Director
Executive Vice President and Tokuichi Uranishi
10

Representative Director
Kazuo Okamoto
Kyoji Sasazu
Mitsuo Kinoshita
Takeshi Uchiyamada
Masatami Takimoto

Senior Managing Director

Akio Toyoda
Yukitoshi Funo
Takeshi Suzuki
Atsushi Niimi
Hiroshi Takada
Teiji Tachibana
Shinichi Sasaki
Akira Okabe
Yoichiro Ichimaru
Shoji Ikawa
Koichi Ina
Takeshi Yoshida
Shinzo Kobuki
Akira Sasaki
Hiroshi Kawakami
Tadashi Arashima
Mamoru Furuhashi
Satoshi Ozawa

11

Honorary Chairman
Senior Advisor

Shoichiro Toyoda
Hiroshi Okuda

Locations of Toyota Facilities

12

Toyota Manufacturing Subsidiaries and

Affiliates:
Start

Main products

of

operations

Toyota Motor Kyushu, Inc.

Harrier,

Harrier

Hybrid,

Kluger, Kluger Hybrid, IS, ES

Transmissions,

transfers,

Toyota Motor Hokkaido, Inc. aluminum wheels, drivetrain

parts, etc.
Toyota Motor Tohoku Co., Mechanical
Ltd.

and

electronic

parts
Hiace, Liteace, Voxy, Noah,
Estima, Prius, Land Cruiser,

Toyota Auto Body Co.,Ltd.

Alphard,

Ipsum,

Regiusace,
Hybrid,

Townace,

Coaster,

Estima

Alphard

Hybrid,

Crown,

Corolla

LX470
Century,
Kanto Auto Works, Ltd.

Spacio, Corolla Fielder, Isis,

Belta, SC, Auris, BLADE
Raum,

Central Motor Co., Ltd.

MR-S,

Corolla

Scion

Axio,

xB,

Corolla

hatchbacks
Gifu Auto Body Industry Co.,
Ltd.
Daihatsu Motor,Co., Ltd.

13

Hiace
Rush, Passo, Probox, Succeed,
bB, Porte, SIENTA

Toyota Today
Supporting Spirit of Athletics

Toyota continued its support of the ideals and spirit

embodied in athletics by becoming, for the third time
since 2003, the Official Partner to the 11th IAAF World
Championships in Athletics, held in Osaka, Japan,
August 25th-September 2nd. Through the sponsorship
and

global

advertising

campaign

with

the

tagline,"Beyond Limits," Toyota aims to communicate

its support for athletes who, like Toyota, continually
push themselves further in pursuit of the ultimate goal.
Apart from providing a fleet of 220 cars for use as
official vehicles at this year's championships,Toyota
also supported a program to encourage new world
records for women's events by becoming the official
women's bib sponsor.

14

Toyotas First FFV

Toyota do Brasil LTDA. (TDB) launched Toyota's firstever flex fuel vehicle (FFV), a vehicle which runs on
gasoline, ethanol or any combination of the two, at a
line-off ceremony at its Indaiatuba Plant in So Paulo
on May 29th. Representing Toyota's commitment to
developing environmental technologies, the locally
produced Corolla Flex and Corolla Fielder Flex are the
first marketed Toyota models that can run on 100%
bioethanol. The introduction of the two models in
Brazil, where bioethanol is widely used as fuel and
FFVs represent 83% of newly registered vehicles in the
market, firmly demonstrates Toyota's belief in listening
to its customers. In the first semester of the year,
Toyota accounted for almost 33,000 of the more than
one million vehicles sold in Brazil during that period.

Island Adventure
Members of the Philippine motoring press had a wet
and wild time at the Toyota Road Trek 3, held May
31st-June 3rd in the archipelago's central islands.
Bringing media representatives to a variety of wellknown destinations across the country, the annual road
trip is conducted by Toyota Motor Philippines Corp. to
demonstrate the toughness and versatility of its IMVs.
15

This year, the event took over 40 participants on an

island-hopping adventure, enabling them to fully test
the exceptional capabilities of the Innova, Fortuner and
Hilux vehicles.
A series of competitive, water-related activities made it
a truly challenging and fun trip that encouraged
teamwork, camaraderie and friendship among all
attendees. The event was prominently featured in major
newspapers and magazines, further boosting the
popularity of IMVs in the market.

A Way to Learn Road Safety

Dedicated to promoting activities that help minimize
traffic accidents in Pakistan, Indus Motor Company
Limited (IMC) in January launched a Toyota School
Road Safety Program. Through music concerts, skits by
clowns and quizzes in schools, the pilot program aims
to educate children about road safety in a fun and
memorable way. Twenty schools in Karachi and around
18,000 children have already benefited from the
program, which is part of IMC's comprehensive
corporate social responsibility initiative with the
slogan, "Concern Beyond Cars." IMC looks to expand
the program to other schools in Karachi and later to
other cities, given the overwhelming response from the
children and parents who have so far participated.

16

Crown Bamboo Concert

As part of its 2007 campaign for the Crown with the
theme, "Playing out your life with intelligence," FAW
Toyota Motor Sales Co., Ltd. held its Crown Bamboo
Concert at the famous Anji bamboo forest in Zhejiang
province, China, on August 18th. The classical music
concert

successfully

communicated

the

flagship

model's philosophy of harmony to the guests present,

and was extensively featured in various media across
China.

Dreaming about Future

Toyota Motor Corporation got a glimpse of the future
through the eyes of children across Asia and China
when it held the Dream Car Art Contest from October
to January. Giving school students aged 15 years and
younger the exciting challenge of drawing their ideal
car, the annual contest generated greater awareness of
the Toyota brand in the region. By means of a website,
ads in Reader's Digest magazine and promotions at
local dealerships, Toyota successfully raised public
consciousness about the contest, drawing over 20,000
entries from 12 countries - an eightfold increase from
the number of designs submitted at the first contest in
2004.

Toyota Turns 40
Toyota AG (TAG), Toyota's distributor in Switzerland,
celebrates

its

40th

anniversary
17

with

year-long

promotions and a series of activities for its customers

and partners. Kicking off its commemorative year with
an elaborate Auris media launch on February 16th,
TAG has since initiated a comprehensive advertising
campaign that creates awareness of its special
promotion packages for customers as well as Toyota's
successful history in Switzerland. In March, a birthday
gala dinner for 900 associates, dealers and partners
served to thank everyone within the TAG Family for
their support and encouragement throughout the
distributor's four decades in the country.

Growth of Toyota
Lasting growth for Toyota will depend on aligning our
interests with the larger interests of customers and the
community. We must be a company where people think
seriously about the role and responsibility of their
company in the world.
Our economic and industrial contribution in each
region grows, for example, as we globalize our
operations. Another way to align our interests with the
larger

interests

of

the

community

is

through

technology.

By the end of 1997, we will introduce the world's first

new-energy transport that is commercially competitive
with conventional automobiles. That is when we will
18

put a hybrid-electric passenger car onto the market in

Japan. Our hybrid-electric car will have a gasoline
engine to generate electricity or provide supplementary
power to the wheels. It is twice as fuel-efficient as
conventionally powered vehicles of comparable size
and performance. Equally important, the value of its
potential fuel savings could prove greater than its cost
premium over conventional vehicles. So, it actually
could save money for car owners.

Survival and growth in our industry will hinge on

developing technologies for reducing environmental
impact of our products and operations, as well as
improving vehicular safety. Photos and text on the
following pages introduce some of the technologies we
are developing to position Toyota as an environmental
leader.

Priorities for Toyota in the growth Strategy

Fortifying our product line

Asserting

competitive

edge

in

technology

Accelerating globalization

Reclaiming market share in Japan

Cultivating demand in new business

sectors

19

Measures for asserting

a competitive

edge in

technology have centered on environmental themes. We

have introduced or demonstrated new power train
technologies in the past year that will make Toyotas run
cleaner and greener than ever. Those technologies
include...

A direct-injection system that makes

gasoline engines more efficient

Hybrid-electric systems that double fuel

efficiency and reduce noxious emissions

Pure electric, "zero emission" vehicles

that alleviate urban pollution

Fuel-cell systems that could transform

the automobile in the 21st century.

Market Share of Toyota

Toyota Motor Corp. grabbed more U.S. retail market
share than Ford Motor Co. in early November and it
was less than one share point behind General Motors
Corp.,
Toyota, Japan's largest automaker, had a 15.4 percent
U.S. retail market share a year earlier.
Toyota plans to enter small car segment in India
Worlds second largest automaker wants to get
offensive in the Indian domestic auto market. Toyota is
very much interested in launching a small car here in
the segment currently dominated by Maruti Suzuki and

20

Hyundai. Tata also has a decent presence in the market

with their Indica range of diesel vehicles.
Toyota is at the moment carrying out a feasibility study
for launching such a vehicle in the domestic market
where it has models like the Innova and Camry
amongst others. They have had an incredible success
with their stopped Qualis model and are selling Toyota
Innova in large numbers. T Ino, director (marketing),
Toyota Kirloskar Motor Pvt Limited has expressed that
the Indian auto market is a huge one and has the
capacity to involve more players in the small car
segment.
Toyota has a variety of interesting models in its global
lineup, which it can consider to launch in the Indian
market. Some of these are Vios, Platz, and Passo. The
company also expects to break even here in India this
year with all the accumulated losses were expected to
be wiped out during 2005. They also plan to invest
around Rs 130 crores during the current year to
enhance efficiency. Toyota plans to open up another
manufacturing plant in India and is currently looking
for a location, which suits its requirement.

Competitors
Hyundai Motors India Limited (HMIL)

A decade after the Korean War and during the period of

21

reconstruction, Hyundai Motor Company began its

fledgling efforts at automobile manufacturing by
entering into a technology transfer agreement with Ford
of Great Britain, receiving design and styling from Ital
Design of Italy, and assembling technology from both
England and Japan, all of which made the production
of our first model car, the "Pony," possible. In just ten
years, in 1976 Hyundai began to export to the world
market. In 1986, we entered the U.S. market
establishing the Excel as a new contender among small
cars and promoting the image of the Korean
automobile industry.

Upon expansion of our Ulsan plant, which enabled

Hyundai Motor Company to have a large scale
production base, and the founding of HM Canadian
Corporation, which established Hyundai throughout
North America, we produced a record 10 million cars
and exported over 4 million, breaking records in a short
span of time. No other automobile company can boast
of these figures over such a short time span. We also
poured our efforts in creating concept cars such as the
HCD-I, followed by the HCD-II and III, electric cars,
and high technology hybrid cars that will bear fruit in
the future with their low pollution emissions, safety
features,

and

environmentally-friendly

recyclable

components. From Pony to Equus, Hyundai Motor

Company is committed to its growth as a mature
company, constantly keeping in mind its customer-

22

oriented mottoes: "Customer Satisfaction" and "Create

Value for Customers."

Marketing strategy of Hyundai

Products:

Sonata Embera

Tucson

Getz

23

Elantra

Terracan

Santro Xing

The Price Strategy

In August 2004, a leading business newspaper reported
that Hyundai Motors India Limited (HMIL), an Indian
subsidiary of the South Korea- based Hyundai Motors
Company (HMC) was expected to reduce the price of
its flagship car - Santro - by as much as Rs 40,000.
Industry experts were expecting a reduction in Santro's
price in response to the price war being waged by the
market leader in India - Maruti Udyog Limited (MUL),
which had reduced the price of its largest selling car in
the B segment - Alto - by Rs 58,000 in two price cuts
starting from September 2003. This move had resulted
in Alto replacing Santro as the largest selling car in the
B segment in the period January to June 2004 (Refer
Exhibit I for the market segmentation of the Indian car
industry).
24

Rebutting the report on price cuts, HMIL's managing

director, BVR Subbu (Subbu) said, "We are not cutting
prices on the Santro. We have allowed our competitors
the prerogative of cutting prices." Several dealers of
HMIL also felt that the company would not reduce
Santro's price as it had not adopted such tactics earlier.
Santro had been the most successful product of HMIL
and was also the largest selling car in the B segment till
the fiscal year 2003-04. Introduced in late 1998, Santro
had emerged as the second largest selling car in India
after MUL's M800 and had retained its position till
March 2004 (Refer Exhibit II for the total units and
value sales of the top eleven car models in India). In
mid 2004, HMIL with its four models, Santro, Accent,
Sonata and Elantra, was the second largest car
company in India with 19% market share in the
industry. The company was planning to launch another
model, 'Getz', in September 2004.

Competitive analysis
Strength of Hyundai

25

Volumes have been Hyundai's main strength, as can be

seen with the rollout of its 2,00,000th car in 32 months
from its Chennai plant. The company also returned a
profit of Rs 67.61 crore in its very first year of
operations in 2000.
Hyundai Motor India will not get into CBU
(completely built unit) imports like the other car
manufacturers, as the company wants to concentrate
only on models that will fetch it high volumes hyundai
have already announced that they would be importing
CBUs for niche markets, either in the high-end bracket
or in the sports car segment in limited editions.

Weakness of Hyundai:
Hyundai's traditional weakness has been the chassis,
which has never really matched the competition,
especially European rivals, but the company claims this
has been sorted out. Brutal price cuts failed to prop up
the Sonata's flagging sales, and worse, tarnished
Hyundai's image, proving price isn't everything in the
upper crust of the market. I have had numerous
problems with the Hyundai dealerships also. When I
complained directly to the manufacturer, their response
was to offer me a Hyundai tote bag or other
promotional item of my choosing.

26

Brand Strategy
Hyundai-Kia Automotive Group today announced the
launch of its new global brand management strategy, in
which Kia and Hyundai will pursue differentiated
brand images as a means of boosting the Groups
overall market share and increasing the value of the
two brands. In accordance with the new strategy,
Hyundai and Kia will be promoted under two separate
brand slogans. The Hyundai slogan - "Drive your way"
- is designed to communicate the companys refined
and confident brand attributes, while the slogan - "The
Power to Surprise" - is aimed at embodying the
exciting and enabling values of the Kia brand.

Maruti Udyog Limited (MUL)

It was established in Feb 1981 through an Act of
Parliament, to meet the growing demand of a personal
mode of transport caused by the lack of an efficient
public transport system.
Suzuki Motor Company was chosen from seven
prospective partners worldwide. This was due not only
to their undisputed leadership in small cars but also to
their

commitment

to

actively

bring

to

MUL

contemporary technology and Japanese management

practices (which had catapulted Japan over USA to the
27

status of the top auto manufacturing country in the

world).
A license and a Joint Venture agreement were signed
between Govt of India and Suzuki Motor Company
(now Suzuki Motor Corporation of Japan) in Oct 1982.

The objectives of MUL then were:

Modernization of the Indian Automobile

Industry.

Production of fuel-efficient vehicles to

conserve scarce resources.

Production of large number of motor

vehicles which was necessary

for

economic growth.

Marketing strategy of Maruti:

PRICE STRATEGY: - (RS.-LAKHS)

Maruti 800

2,00,850

28

Maruti versa

4,24,214

Omni

2,51,000

Zen

2,85,000

Wagnor

3,43,221-4,68,609

Esteem

4,25,0
5,09,000

Baleno

6,62,556

GrandVitara-xl7

17,31,400

THE COMPETITION (Maruti)

Since 1985, Maruti Udyog Limited (MUL) has been
the market leader in the passenger car industry in India.
Its flagship product - M800 had the distinction of being
the largest selling car model in India since its launch in
December 1983. Positioned as people's car, M800 ruled
the Indian passenger car market and remained
unchallenged ever since it occupied the top slot, five
months after its introduction. In March 2003, MUL
sold 20,687 units of M800, the highest ever sales by
any single model in a month. It was also the highest
sales since M800 debuted, surpassing its previous
monthly high of 18,735 units in August 1999.
For the first few months of 2004, M800 performed
well, selling 15,301 units in January, 13,518 units in
29

February and 15,540 in March. But gradually Alto,

another MUL product, began eating into M800's share.
Alto reported sales of 8,399 units, 8,324 and 9,011
units in January, February and March respectively. In
April, its sales increased to 9,350 units and in May
2004, Alto took over M800's position as the largest
selling car with sale of 10,373 units, slightly over
M800's sales of 10,016 units. Analysts felt that Alto had
taken the top spot because of its price reduction in
September 2003 by Rs. 23,000 followed by the launch
of the non-AC Alto for Rs. 0.23 mn in the first week of
April 2004.

On reducing the gap between its bread and butter

model M800 and its compact car Alto, MUL said it had
"long term" plans for M800. Commenting on Alto's
pricing strategy, Jagdish Khattar (Khattar), managing
director of MUL, said, "The new price positioning of
the Alto would cannibalize existing A1 segment
product the M800 which is also considered an old
model. But, the cannibalization will remain within the
Maruti family and the bigger numbers will help Maruti
depreciate Alto faster. Net M800 sales may be less but
we would be pushing more Alto and the more we sell
the Alto the faster it will depreciate."

Though industry analysts said this move would boost

MUL's profits, they also expressed their views that
30

MUL's long-term plan might be to discontinue M800

and replace the entry segment with Alto. However,
Khattar clarified that MUL's pricing strategy was not
meant to replace M800 with Alto. He said, "Now, we
have two cars in entry-level. Maruti 800 is still a dream
of Indians, how can I replace it?"

Competitive Analysis
Strength:
In an era when owning a car was a distant dream for a
vast majority of Indians, MUL rolled out its first car,
the M800. The company labeled it a people's car, with a
796cc 3-cylinder engine that delivered 39.5bhp at an
affordable price of Rs. 65,000. The first vehicle was
released for sale in December 1983. Initially, the car
was criticized for its diminutive size, but it proved to be
spacious enough to carry four adults. Better technology
and an affordable price due to a higher level of
indigenization helped MUL achieve a dominant
position in the Indian passenger car market.

Weakness:
MUL reduced the price difference between these two
models positioning them on an almost equal platform,
which resulted in confusion in the minds of consumers
and industry analysts.

Threat:

31

M800 had ruled the passenger car market as the only

car in the entry-level segment in the Indian automobile
industry

and

was

now

facing

the

danger

of

cannibalization from one of its own family members,

Alto For the first few months of 2004, M800 performed
well, selling 15,301 units in January, 13,518 units in
February and 15,540 in March. But gradually Alto,
another MUL product, began eating into M800's share.
Alto reported sales of 8,399 units, 8,324 and 9,011
units in January, February and March respectively. In
April, its sales increased to 9,350 units and in May
2004, Alto took over M800's position as the largest
selling car with sale of 10,373 units, slightly over
M800's sales of 10,016 units. Analysts felt that Alto had
taken the top spot because of its price reduction in
September 2003 by Rs. 23,000 followed by the launch
of the non-AC Alto for Rs. 0.23 mn in the first week of
April 2004.

Main Report Analysis

Marketing Strategies of Toyota
Products:
Avalon
Camry
Camry Salora

32

Corolla
Matrix
Prius
4runner
Highrunner
Land Cruiser

Price:
As far as pricing strategy of Toyota is concerned. They
are focusing on the very segment of the market not
only particular segment. Basically they are focusing on
official and business class people
Product Line
Avalon

$26,625

$28,875

$31,075

$33,815

Camry

$18,445(standard)

$19,545(LE)

$20,375(SE)

$22,795(XLE)

Camry Salora

$19,530

$21,025

$23,405

$26,942

Corolla

$14,005

$15,050

$15,215

$17,780

Matrix

$15,110

$16,590

$19,100

Prius

$21,725

4runner

$27,635

Highrunner

$34,625

Land Cruiser

$56,115

Sequoia

$32,820

Sienna

$23,625
33

Generic Strategies - Michael Porter (1980)

Generic strategies were used initially in the early

1980s, and seem to be even more popular today. They
outline the three main strategic options open to
organization that wish to achieve a sustainable
competitive advantage. Each of the three options are
considered within the context of two aspects of the
competitive environment:
Sources of competitive advantage - are the products
differentiated in any way, or are they the lowest cost
producer in an industry? Competitive scope of the
market - does the company target a wide market, or
does it focus on a very narrow, niche market?

34

The generic strategies are: 1. Cost leadership, 2.

Differentiation, and 3. Focus.

1. Cost Leadership
The low cost leader in any market gains competitive
advantage from being able to many to produce at the
lowest cost. Factories are built and maintained; labor is
recruited and trained to deliver the lowest possible
costs of production. 'cost advantage' is the focus. Costs
are shaved off every element of the value chain.
Products tend to be 'no frills.' However, low cost does
not always lead to low price. Producers could price at
competitive parity, exploiting the benefits of a bigger
margin than competitors. Some organization, such as
Toyota, are very good not only at producing high
quality autos at a low price, but have the brand and
marketing skills to use a premium pricing policy.

2. Differentiation
Differentiated goods and services satisfy the needs of
customers through a sustainable competitive advantage.
This allows companies to desensitize prices and focus
on value that generates a comparatively higher price
and a better margin. The benefits of differentiation
require producers to segment markets in order to target
goods and services at specific segments, generating a
higher than average price. For example, Toyota
differentiates

its

product
35

and

service.

The

differentiating organization will incur additional costs

in creating their competitive advantage. These costs
must be offset by the increase in revenue generated by
sales. Costs must be recovered. There is also the chance
that any differentiation could be copied by competitors.
Therefore there is always an incentive to innovated and
continuously improve.

3. Focus or Niche strategy

The focus strategy is also known as a 'niche' strategy.
Where an organization can afford neither a wide scope
cost leadership nor a wide scope differentiation
strategy, a niche strategy could be more suitable. Here
an organization focuses effort and resources on a
narrow, defined segment of a market. Competitive
advantage is generated specifically for the niche. A
niche strategy is often used by smaller firms. A
company could use either a cost focus or a
differentiation focus. With a cost focus a firm aims at
being the lowest cost producer in that niche or segment.
With a differentiation focus a firm creates competitive
advantage through differentiation within the niche or
segment. There are potentially problems with the niche
approach. Small, specialist niches could disappear in
the long term. Cost focus is unachievable with an
industry depending upon economies of scale e.g.
telecommunications.

36

Customer satisfaction:
Toyota's believes in putting the customer first and aims
to provide the best levels of customer satisfaction as its
main marketing strategy. Their dealers have also
worked hard to provide their high levels of customer
support."
"In the last one year, Toyota has taken many initiatives,
which has made Innova the most successful product.
Innova has successfully become a category creator.
We will continue to meet the ever-challenging customer
expectations and will come out with innovative
marketing strategies.
With a change of guard at Toyota Kirloskar Motor Ltd.,
the company has evolved a new strategy to capture 15
per cent market share in the Indian automotive
segment. Effective from January 1, Atsushi Toyoshima
has been appointed Managing Director of the company,
replacing Sachio Yamazaki. "Competition is intense in
the Indian market for domestic and foreign companies.
The Indian market is important for Toyota with
potential to aid its growth strategy," Yoshio Ishizaka,
Executive Vice-President, Toyota Motor Corporation,
said.
According to analysts, the Indian market would touch
annual sales of 1.2 million units by 2005. Last year,
Toyota sold 3.8 million units overseas, manufacturing
37

six million vehicles at 56 plants in 25 countries. In

India, the Toyota Quails notched sales of 25,000 units
since its launch last year, he said. Toyota's strategy to
corner a significant chunk of the Indian market
involves "superior product offering and dedicated
technology". In this context, the change of leadership in
Toyota's Indian division is important, indicating a more
important role for the company's manufacturing base in
Bangalore.
"Bangalore is an ideal location to meet all of Toyota's
needs, including auto components," Mr. Toyoshima
said According to the managing director of Toyota
Kirloskar Motor, Atsushi Toyoshima, the decision to
introduce Innova here (India) was based on three
factors. First, over the last five years, the C- segment
(between Rs 5 lakh to Rs 10 lakh) of the car market has
grown by 20 per cent every year. The multi utility
vehicle segment has also grown at double-digit levels.
Second, with an improving lifestyle and better roads,
the Indian consumer wants to take his vehicle for long
drives with friends and family. Third, there is a latent
desire of customers, including those owning MPVs, to
seek attributes

like

greater

interior

space

and

overloading ability, while passenger car buyers look for

better styling and improved riding comfort. Innova
brings together the space and fuel economy of an MPV
with the style, agility and power of a sedan. Toyota
Kirloskar Motor has described it as the first three-row
seating passenger car in the Indian market.

38

CHAPTER-2
Literature Review
Shopping around can be time- and energy-consuming,
and consumers do not always possess enough product
knowledge to ensure the best buy. Under such
circumstances, consumers usually go by well-known
brands, which may result in higher costs but requires
less research efforts. Thus, brand image not only affects
how consumers view a product but has the benefit of
lowering purchase risks (London et al. 1998). Brand
39

management has become increasingly important, given

the rapid change of the global market and elevation of
competition. Effective brand management creates clear
product differentiation, consumer preference and
loyalty, resulting in broadening market share. Aaker,
(1991) believes brand establishment and management
should be not only one of the operating focuses for
major

industries

but

viewed

as

source

of

competitiveness. For consumers, a brand provides a

certain degree of product guarantee.
The success of a firm depends largely on its capability
to attract consumers towards its brands. In particular, it
is critical for the survival of accompany to retain its
current customers, and to make them loyal to the brand.
Former Ford Vice President Basil Coughlan, estimates
that every percentage point of loyalty is worth $100
million in profits to his firm (Serafin et al. 1994), and
major enterprises like Del Monte, Harley Davidson and
General Motors are spending large sums of money to
induce brand loyalty (Monzo, 1994). Elizabeth, (2004)
states that brand loyalty is still believed to affect many
product categories in the modern world market.
Examples of brand loyalty promotion abound, showing
the brand loyal customer is an asset to corporations. As
brand names continue to revel in a history of consumer
success.

40

Objective of the study

To serve the customer through channel of

distribution.

To know about the marketing strategies used by

Toyota.

To know about the marketing strategies of the

competitors of Toyota.

To find out the market share of Toyota.

To know where Toyota stands as far as the BCG

matrix models concerned.

41

LIMITATIONS OF THE STUDY

Since the road to improvement is never ending, so this
study also suffers from certain limitations. Some of
them are as follows:
Because of illiteracy, it was a time consuming
method in which continuous guidance was
required.
Questionnaire method involves some uncertainty
of response. Co-operation on the part of
informants, in some cases, was difficult to
presume.
It is possible that the information supplied by the
informants may be incorrect. So, the study may
lack accuracy.

42

RESEARCH METHODOLOGY
This survey research has utilized both primary and
secondary data and information from different sources
including Toyota Corporation, Text books, magazines,
journals and websites about different variables of the
study. This research uses questionnaires for finding the
information obtained from the respondents in the
sampling unit. The target Population for the researcl4 is
the passenger car users in the city of Peshawar. The
sample data is collected from the various places inside
the Peshawar city which include University campus,
Hayatabad,

Kharkhano

cantonment

area.

market,

This

research

city

area

and

selected

100

respondents as the sample size by asking them that

whether they are current passenger car users? The
questionnaire gathered the primary data and recorded
people responses for analysis.

43

This project depends upon the primary as well as

secondary sources which are as follows:

Primary Source:
Observation
Experiment
Talking with distributors, retailers and so on
Secondary Source:
Balance sheet of the company
Company website

Sample Size & Areas Covered

A customer-based survey was conducted in which 100
people were asked to fill the questionnaire in which
belong to cities of Delhi.
Because it was not possible to consider each and every
person of those cities or of villages so, PROBABILITY
SAMPLE or RANDOM SAMPLE was taken.

44

Statistical and Presentation Tools Used

PRIMARY DATA is:
First classified i.e. grouped qualitatively and
quantitatively according to the situation or the
type of the data which was collected.
After classifying is represented in the form of
tables i.e. systematically arranged in columns
and rows.
Some of the data is also graphically represented
in the form of PIE DIAGRAM.

SECONDARY DATA is represented:

In the form of tables.
By

the

way

SUBDIVIDED

of

BAR

GRAPHS

and

BAR GRAPHS (Graphical

presentation).
While Suzuki-Maruti, Tata Motors, Hyundai,
Mahindra & Mahindra and Toyota command
the top five positions in the domestic passenger
vehicle segment, Honda, GM and Ford are
fighting each other for the sixth position.

CHAPTER-3
DATA ANALYSIS/INTERPRETITION
45

Strength:
In an era when owning a car was a distant dream for a
vast majority of Indians, MUL rolled out its first car,
the M800. The company labeled it a people's car, with a
796cc 3-cylinder engine that delivered 39.5bhp at an
affordable price of Rs. 65,000. The first vehicle was
released for sale in December 1983. Initially, the car
was criticized for its diminutive size, but it proved to be
spacious enough to carry four adults. Better technology
and an affordable price due to a higher level of
indigenization helped MUL achieve a dominant
position in the Indian passenger car market.

Weakness:
MUL reduced the price difference between these two
models positioning them on an almost equal platform,
which resulted in confusion in the minds of consumers
and industry analysts.

Threat:
M800 had ruled the passenger car market as the only
car in the entry-level segment in the Indian automobile
industry

and

was

now

facing

the

danger

of

cannibalization from one of its own family members,

Alto
For the first few months of 2004, M800 performed
well, selling 15,301 units in January, 13,518 units in
February and 15,540 in March. But gradually Alto,
another MUL product, began eating into M800's share.
46

Alto reported sales of 8,399 units, 8,324 and 9,011

units in January, February and March respectively. In
April, its sales increased to 9,350 units and in May
2004, Alto took over M800's position as the largest
selling car with sale of 10,373 units, slightly over
M800's sales of 10,016 units.

SWOT Analysis Toyota

Strengths:
New investment by Toyota in factories in the US and
China saw 2005 profits rise, against the worldwide
motor industry trend. Net profits rose 0.8% to 1.17
trillion yen ($11bn; 5.85bn), while sales were 7.3%
higher at 18.55 trillion yen. Commentators argue that
this is because the company has the right mix of
products for the markets that it serves. This is an
example of very focused segmentation, targeting and
positioning in a number of countries.
In 2003 Toyota knocked its rivals Ford into third spot,
to become the World's second largest carmaker with
6.78 million units. The company is still behind rivals
General Motors with 8.59 million units in the same
period. Its strong industry position is based upon a
number of factors including a diversified product
range, highly targeted marketing and a commitment to
lean manufacturing and quality. The company makes a
large range of vehicles for both private customers and
commercial organisations, from the small Yaris to large
trucks. The company uses marketing techniques to
47

identify and satisfy customer needs. Its brand is a

household name. The company also maximizes profit
through efficient manufacturing approaches (e.g. Total
Quality Management).

Weaknesses:
Being big has its own problems. The World market for
cars is in a condition of over supply and so car
manufacturers need to make sure that it is their models
that consumers want. Toyota markets most of its
products in the US and in Japan. Therefore it is
exposed

to

fluctuating

economic

and

political

conditions those markets. Perhaps that is why the

company is beginning to shift its attentions to the
emerging Chinese market. Movements in exchange
rates could see the already narrow margins in the car
market being reduced.
The company needs to keep producing cars in order to
retain its operational efficiency. Car plants represent a
huge investment in expensive fixed costs, as well as the
high costs of training and retaining labour. So if the car
market experiences a down turn, the company could
see over capapacity. If on the other hand the car market
experiences an upturn, then the company may miss out
on potential sales due to under capacity i.e. it takes
time to accommodate. This is a typical problem with
high volume car manufacturing.

48

Opportunities:
Lexus and Toyota now have a reputation for
manufacturing

environmentally

friendly

vehicles.

Lexus has RX 400h hybrid, and Toyota has it Prius.

Both are based upon advance technologies developed
by the organization. Rocketing oil prices have seen
sales of the new hybrid vehicles increase. Toyota has
also

sold

on

its

technology

to

other

motor

manufacturers, for example Ford has bought into the

technology for its new Explorer SUV Hybrid. Such
moves can only firm up Toyota's interest and
investment in hybrid R&D.
Toyota is to target the 'urban youth' market. The
company has launched its new Aygo, which is targeted
at the streetwise youth market and captures (or attempts
to) the nature of dance and DJ culture in a very
competitive segment. The vehicle itself is a unique
convertible, with models extending at their rear! The
narrow segment is notorious for it narrow margins and
difficulties for branding.

Threats:
49

Product recalls are always a problem for vehicle

manufacturers. In 2005 the company had to recall
88,000 sports utility vehicles and pick up trucks due to
faulty front suspension systems. Toyota did not give
details of how much the recall would cost. The majority
of affected vehicles were sold in the US, while the rest
were sold in Japan, Europe and Australia.
As with any car manufacturer, Toyota faces tremendous
competitive rivalry in the car market. Competition is
increasing almost daily, with new entrants coming into
the market from China, South Korea and new plants in
Eastern Europe. The company is also exposed to any
movement in the price of raw materials such as rubber,
steel and fuel. The key economies in the Pacific, the US
and Europe also experience slow downs. These
economic factors are potential threats for Toyota .

50

DATA ANALYSIS
Que.1 HOW MANY PEOPLE ARE THE
OWNERS OF TOYOTA?

YES

24%

NO

76%

INFERENCE:
24% of the respondents were owners of Honda
City
51

QUES.

HOW

MANY

PEOPLE

ARE

SATISFIED WITH TOYOTA?

SATISFIED

83%

DIS SATISFIED

17%

INFERENCE:

83% of the Respondents were satisfied with their cars

and the services of TOYOTA

52

However 17% of the Respondents were dissatisfied at

the same time.

QUES: WHAT PREFRENCES ARE GIVEN

BY THE PEOPLE?

TOYOTA
HYUNDAI
MARUTI
HONDA

18%
37%
21%
24%

INFERENCE:
18% of the respondents would prefer to buy a
Toyota car against its competitors.
53

 37% of respondents preferred for Maruti.

21% and 24% respectively preferred for
Hyundai & Honda.

QUES.HOW PEOPLE GET INFORMATION

ABOUT TOYOTA?

DEALERS

12%

PRINT MEDIA

20%

TELEVISION

13%

INTERNET

55%

54

INFERENCE :
Information through Internet and Print media
accounts for more than half or 75% of the
information shared with the masses.
Rest 25% was shared by T.V. and Dealers for
providing the information.

QUES: IS TOYOTA A FUEL EFFICIENT

CAR?

YES

78%

NO

22%

55

INFERENCE:
78% of the respondents felt that Toyota has the
most fuel efficiency.
While 22% felt it isnt the most fuel efficient.

QUES: HOW ARE THE FEATURES OF

TOYOTA?

GOOD

70%

VERY GOOD

10%

NOT SO GOOD

8%

SATISFACTORY

12%

56

INFERENCE:

70% of the respondents felt that the features of

the Toyota are good.

While 8% of respondents thought it was not so

good, 10% thought it was very good and 12%
felt satisfactory about the features.

QUES: WHAT ARE THE BEST FEATURES

OF TOYOTA CARS?
HANDLING

15%

FUEL EFFICIENCY

18%

DESIGN

38%

COMFORT

29%

57

INFERENCE:
Toyota is best known for its design & comfort.
Then comes Handling and Fuel Efficiency.

QUES: HOW MANY PEOPLE LIKES THE

INTERIOR OF TOYOTA CARS?
GOOD

74%

VERY GOOD

16%

NOT SO GOOD

22%

SATISFACTORY

7%

58

INFERENCE:

The interiors of Toyota are very good according

to 74% of the respondents.

16% said it was very good, 7% said it was

satisfactory and 3% felt it was not so good.

QUES: WHAT SHOULD BE DONE TO

IMPROVE TOYOTA?

MAKE IT AFFORDABLE

72%

CHEAPER SPARE PARTS

15%

MORE SERVICE STATIONS

13%

59

INFERENCE:

If Toyota is made more affordable then it would

win more customers, a theory which was
backed by 72% of the respondents.

15% and 13% respectively want cheaper spare

parts and more service stations.

QUES: WHAT SHOULD BE DONE TO

MAKE TOYOTA THE BEST CARS?
MAKE IT FUTURISTIC

60%

MAKE IT SPORTY

15%

GIVE IT A RETRO LOOK

10%

A CONCEPT CAR LOOK

15%

60

INFERENCE:

To make it the best car in its class it should be

made more futuristic which was felt by 60% of
the respondents.

15%

of the respondents thought it should be

made sportier.

10% wanted it

to have a retro look and 15%

wanted to give it a concept car look.

QUES:

HOW

MANY

PEOPLE

ARE

SATISFIED WITH THE SALES SERVICES?

HAPPY

85%

UNHAPPY

15%

61

INFERENCE:
Overall 85% of the respondents were
happy with the after sales service
provided by Toyota.
15% were unhappy with Toyota due to
poor after sales services provided by
them.

CHAPTER-4
Findings

62

 The strong industry position of toyota is based

upon a number of factors including a diversified
product range, highly targeted marketing and a
commitment to lean manufacturing and quality.
The

company

(Toyota)

uses

marketing

techniques to identify and satisfy customer

needs. Its brand is a household name. The
company

also

maximizes

profit

through

efficient manufacturing approaches (e.g. Total

Quality Management).
Toyota is to target the 'urban youth' market. The
company has launched its new Aygo, which is
targeted at the streetwise youth market and
captures (or attempts to) the nature of dance and
DJ culture in a very competitive segment.
Toyota's believes in putting the customer first
and aims to provide the best levels of customer
satisfaction as its main marketing strategy.
Their dealers have also worked hard to provide
their high levels of customer support."
Competition is intense in the Indian market for
domestic and foreign companies. The Indian
market is important for Toyota with potential to
aid its growth strategy,
They have had an incredible success with their
stopped Qualis model and are selling Toyota
Innova in large numbers.

63

CHAPTER-5 CONCLUSION
While Suzuki-Maruti, Tata Motors, Hyundai, Mahindra
& Mahindra and Toyota command the top five
positions in the domestic passenger vehicle segment,
Honda, GM and Ford are fighting each other for the
sixth position. Incidentally, in the first five months of
the fiscal (Apr-Aug 04) Skoda has moved to the tenth
position, overtaking Italian major Fiat.
Maruti Udyog (MUL), which has been the market
leader in the mini, compact and mid-size segments,
retains its leadership position with sales of 1.9 lakh
units, followed by Tata Motors with 70,022 units,
Hyundai Motor India with 48,360 units, Mahindra with
28,530 units and Toyota with 19,797 units.
Competitive pricing and better value offerings were
driving the sales of most auto majors for the past few
months. Despite a competitive business environment,
most of the car majors were able to hold on to their
market shares in the April to August 04 period. The
exceptions were Hyundai, Mahindra & Mahindra,
Hindustan Motors and Fiat, who saw their market
shares fall marginally.

64

The market is slow and there are visible signs of

discounting, particularly in the higher end of the car
segment. However, since entry level and compact cars
are volume segments, the slowdowns effect is more
visible here.

For many automobile companies, it was a double

whammy in August 04. The truckers strike and
adhikmas (inauspicious period) last month affected
dispatches of most car companies, including Maruti
Udyog, General Motors and Tata Motors, resulting in
lower sales. The exceptions were Honda Siel Cars
India, Ford India and Toyota Kirloskar.

CHAPTER-6
RECOMMENDATION

Toyota should adopt the defensive marketing

strategy because as being the second largest car
producer in the international market,

Toyota must at the moment carry out a

feasibility study for launching a vehicle in the

65

domestic market where it has models like the

Innova and Camry amongst others.

Toyota should conduct market survey in Indian

market for quails in order to know the
perception of Indian consumers.

Toyota should adopt an offensive marketing

strategy for entering in the small car segment.
This market is dominated by Maruti Suzuki and
Hyundai in the Indian domestic auto market.

Toyota must plan out an ideal marketing

producing capacity, because it faces the
problem of over and under capacity in case of
upturn and downturn of the market.

66