PRIUS: LEADING A WAVE OF HYBRIDS

INTRODUCTION

“If you owned [a hybrid car], you could feel good about using less gasoline and being a trendsetter, but you couldn't expect the fuel savings to make up for the thousands of extra dollars that the hybrid cost. There was no financial reward for environmental virtue.” (Leonhard, 2006)

This quote neatly presents the tradeoffs in marketing green product like hybrid cars; often they are not competitive by themselves in terms of prices or features. So how do you market a product like this? Can you convince a lot of people to forgo features or pay more money in order to be eco-friendly?

In general, the answer is no. While certain market segments will show a preference for eco friendly products, those attributes alone are not enough for a product to gain widespread acceptance (Power, 2008). The Toyota Prius provides a on crete case study of this truth. While the biggest product differentiation of the Prius is a fuel efficient, hybrid engine, most people don't buy it because it is eco-friendly.

Toyota Motor Corporation  Toyota is a Japanese automotive manufacturer

headquartered in Toyota Japan. In 2013 the multinational corporation consisted of 333,498 employees worldwide and, as of January 2014, is the fourteenth-largest company in the world by revenue. Toyota was the largest automobile manufacturer in 2012 (by production).In July of that year, the company reported the production of its 200-millionth vehicle . Toyota is the world's first automobile manufacturer to produce more than 10 million vehicles per year. It did so in 2012 according to OICA, and in 2013 according to company data .As of November 2013, Toyota was the largest listed company in Japan by market capitalization(worth more than twice as much as #2-ranked Soft Bank ) and by revenue.

The company was founded by Kiichiro Toyoda  in 1937 as a spinoff from his father‘s company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries , it created its first product, the Type A engine , and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation produces vehicles under 5 brands, including the Toyota brand, Hino, Lexus, Ranz , and Scion. It also holds a 51.2% stake in Daihatsu, a 16.66% stake in Fuji Heavy Industries, a 5.9% stake in Isuzu, and a 0.27% stake in Tesla, as well as joint-ventures with two in China, one in India (Toyota Kirloskar), one in the Czech Republic, along with several "nonautomotive" companies.TMC is part of the Toyota Group, one of the largest conglomerates in the world.

CASE STUDY ABOUT TOYOTA PRIUS Americans love car which have high gas

mileage and emits fewer air pollutants. They even rebelled against gasoline price increase even its much more cheaper in U.S. than any other country. Toyota introduced Prius in 2000. The name means “to go before”. The Prius and the companion hybrid Honda came to be the first in a wave of hybrid.

It combines a 1.5 liter, 4 cylinders gas engine and a 33 kilowatt electric motor to deliver 114 horsepower. It comfortably seats five and has 12 cubic feet of trunk space. The electric motor starts the car and operates at low speeds, using a nickel metal-hybrid battery. At higher speed, the Prius autotomatically switches to the gasoline engine.

The downside is that the Prius is besides no muscle machine. It also costs about $3,000 more than the Echo, although they are nearly the same car. In addition, hybrids use regenerative braking to recharge its batteries, with the result that braking during the EPA driving cycle is feeding more energy back into the system, boosting estimated gas mileage.

On the brighter side, Toyota and its competitors believe that the cost will decrease once the production of hybrids begins to yield economies of scale. At present, the corporate average

The case throws a light on how

Toyota marketed their hybrid product ’ Prius ’ in a market which had a history of fast cars and big SUVs. Prius has two drive trains :-

1. A conventional gasoline engine

2. An electric motor When running in slow speeds

(15 mph) the electric motor powers the Prius, and on speeds above 15 mph the gas engine provides the power to reduce to the car and charges the battery at the same time.

Although , being unpopular in the “test drives” fraternity due to its sluggish behavior, the early sales of Prius were quite impressive. Toyota targeted those buyers which are known as early adopters and innovators and those who always love new technology. Innovative marketing tactics were adopted in the print media, on television and on the internet to create a hype about the car. The case tells how Toyota identified the market and adopted itself at various stages of product cycle and concentrated on its target customers.

OPPORTUNITIES

THREATS

SWOT Analysis

STRENGTHa. Innovative cultureb. Brand reputation

valued at $ 30 billionc. Industry leader in

production and salesd. Strong brand portfolioe. The leader in “green”

cars development.

WEAKNESSESa. Fear large

recallsb. Weak

presence in the emerging markets

OPPORTUNITIESa. Positive attitude towards

“green” vehiclesb. Increase fuel pricesc. Changing customer needsd. Growth through acquisitions

THREATSa. Decreasing fuel pricesb. New emission standardsc. Rising new material pricesd. Intense competitione. Natural disastersf. Appreciating yen exchange

rate.

QUESTION-ANSWERS

QUESTION-ANSWERS

1. What micro -environmental factors affect the introduction and sale of the Toyota Prius? How well has Toyota dealt with these factors?

2. Outline the major macro –environmental factors – demographic , economic, natural, technological, political and cultural – that have affected the introduction and sale of the Toyota Prius. How has Toyota dealt with each these factors?

3. Evaluate Toyota’s marketing strategy so far. What has Toyota done well? How might it improve its strategy?

4. In your opinion, what are the advantages of Toyota’s early entry into the market? What are the disadvantages? Should Toyota have waited – like Ford, GM and Daimler Chrysler?