Question

Toyota- Let’s Go Places!

Toyota Motor Corporation is a Japanese multinational automotive manufacturer headquartered in Toyota, Aichi, Japan. In 2017, Toyota's corporate structure consisted of 364,445 employees worldwide and, as of December 2019, was the tenth-largest company in the world by revenue. Toyota is the second largest automobile manufacturer in the world, behind Volkswagen, based on 2018 unit sales. Toyota was the world's first automobile manufacturer to produce more than 10 million vehicles per year, which it has done since 2012, when it also reported the production of its 200-millionth vehicle. Toyota is the global market leader in sales of hybrid electric vehicles, and one of the largest companies to encourage the mass-market adoption of hybrid vehicles across the globe. The company was founded by Kiichiro Toyoda in 1937, as a spinoff from his father's company Toyota Industries to create automobiles. Toyota’s new tagline “Let’s Go Places” evokes the forward looking and optimistic momentum of Toyota. It invites customers to see new places, discover new possibilities and dream big dreams together with Toyota and its new cars.

Buyer Behavior and Buyer Decision Process

Toyota conducted a primary research to study the factors influencing the purchase behaviour of car buyers. It arrived at a conclusion that purchase of a car is influenced strongly by cultural, social, personal, and psychological characteristics of buyers; and most of these factors cannot be controlled by marketers.

Toyota also studied the various stages of buyer decision process through which buyers go through before making a final purchase decision. Toyota car buyers, who came to the Toyota showroom to buy a new car, are in a new and complex car purchase situation. It has been studied that they make buying decisions by first recognizing a need to buy a car. The new car buyers have a need to buy a new Toyota car which is triggered by internal and external stimuli. The need can be triggered by internal stimuli when one of the person’s normal needs rises to a level high enough to become a drive. Their needs are also triggered by external stimuli such as advertisements in magazines, newspapers, televisions, and discussions with their friends.

Once these potential car buyers have decided to buy a new car, they pay more attention to car ads, the cars owned by friends, and other car conversations. They also actively search online, talking with their friends, and gathering information in other ways. The sources from where these new car seekers were looking for information were ‘personal sources’ such as family, friends, neighbours, and acquaintances; ‘commercial sources’ such as advertisements, salespeople, dealer and manufacturer, web and mobile sites, packaging, displays; ‘public sources’ such as mass media, consumer rating organizations, social media, online searches, and peer-reviews; ‘experiential sources’ such as examining the cars and test drives. The study revealed that the most effective source of information from where the Toyota new car seekers sought information were ‘personal sources’. In the search of information for new cars, it was found that the buyers were learning about several brands of cars that were available in the market.

From the choice set of selected brands of cars, these buyers narrowed down their choice to three car brands viz. Nissan, Hyundai, and Kia, and were primarily interested in four attributes-price, style, operating economy, and performance. By this time they had formed beliefs about how each brand rated on each attribute. Clearly, if one car rated best on all the attributes, it would predict that the buyers would choose that brand of car. Most buyers were seen to consider several attributes, each with different importance. By knowing the importance each buyer assigned to each attribute, Toyota could predict the choice of car more reliably. Toyota actually studied its buyers to find out how they actually evaluate brand alternatives.

The potential buyers of cars rank different brands of cars and form ‘purchase intentions’. Generally, a buyer’s ‘purchase decision’ will be to buy the most preferred brand, but two factors can come between the ‘purchase intention’ and the ‘purchase decision’. The first factor is the ‘attitudes of others’ and the second factor is ‘unexpected situational factors’.

Toyota believes that, after purchasing its car, the buyer will either be satisfied or dissatisfied and will engage in post purchase behaviour which is of interest to Toyota car manufacturers. Satisfaction or dissatisfaction of the car lies in the relationship between the buyer’s expectation and the car’s perceived performance. If the car falls short of expectations, the buyer is disappointed. Therefore Toyota makes sure that it promises only what it can deliver, otherwise it would end up in cognitive dissonance which is a discomfort caused by post purchase conflict. This discomfort caused by a post purchase conflict is also called ‘PPD’ (‘Post Purchase Dissonance’).

Toyota’s New Product Development Strategy

Toyota carried out a customer-driven new product development process for finding and growing new models of cars. Toyota generated new product ideas through internal and external sources. The new product ideas like coming out with a ‘hybrid car’ or an MPV (Multi-Purpose Vehicle), and so on in the car market. The internal sources where Toyota gets new product ideas are from its own R&D department, scientists, engineers, manufacturing staff, and sales force. The external sources where Toyota gets its new product ideas are from customers, competitors, and suppliers.

When a large number of ideas are created, Toyota goes for idea screening where it adopts an R-W-W new product screening framework. This attractive idea is then developed into a product concept which is a detailed version of a new product idea in meaningful consumer terms. One of the ‘product concepts’ that Toyota developed was an ‘affordably priced midsize car designed as a second family car to be used around town for running errands and visiting friends’. Toyota developed another ‘product concept’ such as ‘a mid-priced sporty compact car appealing to young singles and couples’.

Toyota, then tests these new ‘product concepts’ with a group of target consumers to find out if the concepts have strong consumer appeal. When Toyota found that the second concept tested best, it then designed an initial marketing strategy for introducing this car to the market which is based on the new product concept.

Once the management of Toyota has decided on its new product concept and marketing strategy, it evaluates the business attractiveness of the proposal. Toyota reviews the sales, costs and profit projections for a new product to find out whether these factors satisfy the company’s objectives.

The R&D and the engineering department of Toyota Motor Corporation develop the product concept into the desired car. The new car will have the required functional features and also convey the intended psychological characteristics. Toyota involves the customers in product development and testing. Consumers test-drive the car and rate its attributes.

After the new car passes through both the concept test and the product test, the next step Toyota adopts is ‘test marketing’. This is the stage in the new product development where the new car and its proposed marketing program are tested in realistic market settings. This test marketing gives Toyota the experience with marketing the car before undertaking a huge expense of full introduction. Test marketing gives Toyota the information needed to make a final decision about whether to launch the new car. Toyota then goes ahead with ‘commercialization’ by introducing the new car into the market.

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Disccusion Questions

Question 1

Discuss how Toyota car buyers make buying decisions in a new car purchase situation. Relate this with the different stages of the buyer decision process.

Question 2

which stages of the buyer decision process, do a car buyer experience ‘cognitive dissonance’? Give reasons to substantiate your answer.

Question 3

Explain the different stages of the new product development process that Toyota follow, while developing new car models.

Question4

Explain the different stages of the new product development process that Toyota follow, while developing new car models

Question5

identify the stages of new product development when the new car model and the marketing program are introduced into more realistic market settings.

Answer 1

QUESTION 1 - ANS : -

In case of Toyota Car buyers , who came to the Toyota showroom to buy a new car, are in a new and complex car purchase situation. It has been studied that they make buying decisions by first recognizing a need to buy a car. The new car buyers have a need to buy a new Toyota car which is triggered by internal and external stimuli. The need can be triggered by internal stimuli when one of the person’s normal needs rises to a level high enough to become a drive.

Toyota car buyers are interested in four attributes-price, style, operating economy, and performance

Now we all know the different stages of the buyer decision process. These are

1. Problem Recognition.
2. Information Search.
3. Evaluation of Alternatives.
4. Purchase Decision.
5. Post-Purchase Evaluation.

Once these potential car buyers have decided to buy a new car, they pay more attention to car ads, the cars owned by friends, and other car conversations. They also actively search online, talking with their friends, and gathering information in other ways. The sources from where these new car seekers were looking for information were ‘personal sources’ such as family, friends, neighbours. The potential buyers of cars rank different brands of cars and form ‘purchase intentions’. Generally, a buyer’s ‘purchase decision’ will be to buy the most preferred brand, but two factors can come between the ‘purchase intention’ and the ‘purchase decision’. The first factor is the ‘attitudes of others’ and the second factor is ‘unexpected situational factors.

QUESTION 2 - ANS :

At stage 5 which is Post-Purchase Evaluation , a car buyer experience ‘cognitive dissonance.

At this point in the process you decide whether the backpack you purchased is everything it was cracked up to be. Hopefully it is. If it’s not, you’re likely to suffer what’s called postpurchase dissonance. You might call it buyer’s remorse. You want to feel good about your purchase, but you don’t. You begin to wonder whether you should have waited to get a better price, purchased something else, or gathered more information first. Consumers commonly feel this way, which is a problem for sellers. If you don’t feel good about what you’ve purchased from them, you might return the item and never purchase anything from them again. Or, worse yet, you might tell everyone you know how bad the product was.

Companies do various things to try to prevent buyer’s remorse. For smaller items, they might offer a money back guarantee. Or, they might encourage their salespeople to tell you what a great purchase you made. How many times have you heard a salesperson say, “That outfit looks so great on you!”? For larger items, companies might offer a warranty, along with instruction booklets, and a toll-free troubleshooting line to call. Or they might have a salesperson call you to see if you need help with product

Question 3 - ANS :

In business new product development covers the complete process of bringing a new product to market.Toyota gets its new product ideas are from customers, competitors, and suppliers.When a large number of ideas are created, Toyota goes for idea screening where it adopts an R-W-W new product screening framework. This attractive idea is then developed into a product concept which is a detailed version of a new product idea in meaningful consumer terms

Toyota also follow the following process to launach a new car . Every new product goes through a product planning process comprising of following stages:

1. Idea Generation:

The new product development starts with the search and generation of ideas which may arise from various sources like company’s R&D department, market and consumers trends, competitors, focus groups, employees, sales people and such other.

2. Idea Screening:

At this stage, the generated ideas are screened down on the basis of their feasibility and viability, only practical and workable ideas are developed. The purpose of screening is to have a critical evaluation of product ideas and drop the poor ideas.

3. Concept Development and Testing:

The company may have considered the idea to be feasible, but is has to be tested with the target audience. Here the product idea is converted into meaningful consumer item and presented to appropriate target consumers to know their reactions. If the reaction is positive, the company moves to next stage.

4. Market Strategy Development:

After successful concept testing, the marketing manager will develop a preliminary marketing strategy for introducing the product in the market. The marketing strategy will highlight the segmentation, targeting and positioning strategy.

5. Business Analysis:

Business analysis is the study of economic feasibility of the new product i.e. whether the product will be financially worthwhile in long run or not. This stage estimates the expected future profitability of the new product, i.e. what cash flow product can generate, what will be the cost of production, what will be the expected life of the product, share of market product may get etc.

6. Product Development:

Once the product is declared economically feasible, the company gives the product its physical shape. This stage involves huge investments to be made, as compared to the pervious stages. The physical product as it would appear is prepared so that it can be tested.

7. Test Marketing:

Test marketing is a stage where the new product is tested with a particular target market, to find out whether it is acceptable to the consumers or not. The expectation of the consumers from the product is tested here. Any improvement or modification required can be taken care of. Test marketing, thus, help in pretesting of the product and the marketing plan, before it is launched in the market.

8. Commercialization:

Successful test marketing gives way to actual introduction of the product in the market place. Here the company has to consider certain factors like when to launch the product, where and how the product will be launched, which market and which consumers to target etc. Market entry timing is also very important.

QUESTION - 4 : ANS

SAME AS QUESTION NO 3

QUESTION - 5 : ANS

Once the management of Toyota has decided on its new product concept and marketing strategy, it evaluates the business attractiveness of the proposal. Toyota reviews the sales, costs and profit projections for a new product to find out whether these factors satisfy the company’s objectives.The R&D and the engineering department of Toyota Motor Corporation develop the product concept into the desired car. The new car will have the required functional features and also convey the intended psychological characteristics. Toyota involves the customers in product development and testing. Consumers test-drive the car and rate its attributes.

As we can see from product development process stage 7 is Test marketing.

Toyota adopts is ‘test marketing’. This is the stage in the new product development where the new car and its proposed marketing program are tested in realistic market settings. This test marketing gives Toyota the experience with marketing the car before undertaking a huge expense of full introduction. Test marketing gives Toyota the information needed to make a final decision about whether to launch the new car. Toyota then goes ahead with ‘commercialization’ by introducing the new car into the market.