Page 375 - Marketing Management

352 PART 5 SHAPING THE MARKET OFFERINGS

Marketing Excellence Another big reason behind Toyota’s success is its
manufacturing. The firm is the master of lean manufactur-
ing and continuous improvement. Its plants can make as
>>Toyota many as eight different models at the same time, bringing
huge increases in productivity and market responsive-
ness. And Toyota relentlessly innovates. A typical Toyota
assembly line makes thousands of operational changes in
the course of a single year. Toyota employees see their
purpose as threefold: making cars, making cars better,
and teaching everyone how to make cars better. The
company encourages problem solving, always looking to
improve the process by which it improves all other
processes.
Toyota is integrating its assembly plants around the
world into a single giant network. The plants will cus-
tomize cars for local markets and shift production quickly
to satisfy any surges in demand from markets worldwide.
With a manufacturing network, Toyota can build a wide
variety of models much more inexpensively. That means it
In 1936, Toyota admitted following Chrysler’s landmark will be able to fill market niches as they emerge without
Airflow and patterning its engine after a 1933 Chevrolet building whole new assembly operations. “If there’s a
engine. But by 2000, when it introduced the first hybrid market or market segment where they aren’t present,
electric-gasoline car, the Prius, Toyota was the leader. In they go there,” said Tatsuo Yoshida, auto analyst at
2002, when the second-generation Prius hit showrooms, Deutsche Securities Ltd. And with consumers increas-
dealers received 10,000 orders before the car was even ingly fickle about what they want in a car, such market
available. GM followed with an announcement that it would agility gives Toyota a huge competitive edge.
enter the hybrid market with models of its own. In 2006, Toyota earned over $11 billion—more than
Toyota offers a full line of cars for the U.S. market, all other major automakers combined. In 2007, it edged
from family sedans and sport utility vehicles to trucks and past General Motors to become the world’s largest car-
minivans. It has products for different price points, from maker. And, in 2008, it manufactured 9.2 million vehicles,
lower-cost Scions to mid-priced Camrys to the luxury 1 million more than GM and almost 3 million more than
Lexus. Designing these different products means listening Volkswagen.
to different customers, building the cars they want, and Over the years, Toyota’s automobiles have consis-
then crafting marketing to reinforce each make’s image. tently ranked high in quality and reliability. That all changed
After four years of carefully listening to teens, for in- in 2009 and 2010, however, when Toyota experienced a
stance, Toyota learned that the Scion’s target age group massive recall of over 8 million of its vehicles. A variety of
of 16- to 21-year-olds wanted personalization. So it builds problems ranging from sticking accelerator pedals to
the car “mono-spec” at the factory, with just one well- sudden acceleration to software glitches in the braking
equipped trim level, and lets customers choose from over system affected many Toyota brands, including Lexus,
40 customization elements at dealerships, from stereo Prius, Camry, Corolla, and Tundra.
components to wheels and even floor mats. Toyota mar- Not only had these mechanical defects caused
kets the Scion at music events and has showrooms numerous crashes, they were linked to the deaths of over
where “young people feel comfortable hanging out and 50 people. Toyota’s President Akio Toyoda testified be-
not a place where they just go stare at a car,” said Scion fore Congress and offered an explanation of what went
Vice President Jim Letz. wrong: “We pursued growth over the speed at which we
In contrast, the tagline for the Lexus global strategy is were able to develop our people and our organization. I
“Passionate Pursuit of Perfection.” Dealerships offer regret that this has resulted in the safety issues described
white-glove treatment, though Toyota understands that in the recalls we face today, and I am deeply sorry for any
each country defines perfection differently. In the United accidents that Toyota drivers have experienced.”
States, perfection and luxury mean comfort, size, and Analysts estimated the worldwide recall will cost
dependability. In Europe, luxury means attention to detail Toyota $2 billion to $6 billion including repair costs, legal
and brand heritage. Thus, although Toyota maintains a settlements, and lost sales. Market share dropped
consistent Lexus visual vocabulary, logo, font, and overall 4 percent in the first three months of the recall and was
communication, the advertising varies by country. expected to drop even further as problems continued to