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What macro and micro environment affeted the launch of Toyota Prius

June 6, 2011 by leonardwalto211 · No Comments · Uncategorized

This is a test sentence with spinner code.d vehicle would become a hit in America, a country where SUVs dominated the roads for more than a decade. Despite all of these odds, the Toyota Prius has turned out to be “one of the top 10 selling vehicles in America”. The Prius is such a hit which it is now a household name; customers interchange the word “Prius” with “hybrid” in the same way that they ask for a Kleenex. There are a lot of reasons that led Toyota to success; these reasons will be discussed in the later of this paper. In this paper, the micro-environmental factors affected the launch of the Prius will be revealed as well as the macro-environmental factors that have affected Prius sales. Furthermore, some evaluations of Toyota’s marketing strategy will be proposed and some suggestions for improvement. Lastly, this paper will discuss the advantages and disadvantages as Toyota was an early entrant into the hybrid market with the Prius.

2. What micro-environmental factors affected the launch of the Prius? How well has Toyota dealt with these factors?

According to the article the Toyota was already well into a $40 million campaign targeting a different set of consumers, however the majority desired greater fuel efficiency and something that would not contaminate the environment. Then Toyota came up with the idea of the Prius, thanks to this car, the firm generated a profit over 100% rises in sales. First of all, the firm has used up lots of money on the re-launch of the latest and upgraded Prius model which is over $40 million dollars. For everything, the 4 “Ps” are used, and it was used perfectly by Toyota, beginning with the focal objectives of the firm to provide a new and techno product to the target market it was able to cover its marketing and operating costs and also makes develop profitable customer relationships.

Toyota did not want to get any chances for the features of Prius to be interpreted, Toyota did not offer its customers online purchase facilities. As the fact they hired marketing intermediaries who helped them to advertise the hybrid new brand; also the agents provided professional training to them to offer maximum customer satisfaction. After that, the firm’s marketing strategies also consist of taglines with emotions that were very effective in its promotion. The main target customers of Toyota were those “techies” and are always ready to try the product at its launch.

3. Discuss the macro-environmental factors that have affected Prius sales. How well has Toyota dealt with each of these factors?

3.1 Demographic factor

As population is growing rapidly, lead to significant increase in the demand for automobile and the consumers are more likely to evaluate the differences and improvement in various automobile before they made their choice. Thus at the beginning, Toyota concentrate first both the techies and the early adopter who are willing to take risks and are attracted by the advanced technology of the Prius. Due to the swift growing in concerning about the environment, Toyota focused their targets on the environmentally conscious customers plus the customers who were desired for more fuel efficiency when the Prius-second generation-was introduced in 2004 (Vasilash 2000).

3.2 Economic factor

The automobile industry has used to be seen as periodical and has been reacting to the economic climate accordingly. According to Beauchamp (2006), disregard of the weak economic growth and high oil prices, the sales figures for automobile have been constant lately in Europe, North America and Asia and this had resulted to the emergence of new customer and growth. The fierce competition among the manufacturers had urged Toyota to conduct more research and development on Prius. Therefore, Toyota launched a second generation Prius where they continue making amendment according to the latest technology and preferences of their buyers.

3.3 Natural factor

Due to the gasoline prices started to climb in the summer of 2004, consumers began to shift toward smaller SUVS, cars and hybrids which are more fuel efficient and less depend on oil. Some substitutes such as ethanol fuel mixes and hybrid technology had emerged as a replacement for petrol. Fuel is a non-renewable resource; consumers are concentrating more on the environmental problems, for that reason, the buyers want the lowest fuel consumption and emission possible. That is why Prius is prioritized.

3.4 Political factor

Many states are rewarding the car owners with tax breaks amounting to thousands of dollars. Furthermore, some states government gave further tax breaks, in some circumstances complementing the federal tax break. There were also some eco-friendly organizations involved in this incentive game such as Google, Timberland and Hyperion Solutions providing employees as much as $5,000 toward the purchase of hybrids. Many states even gave permission for the hybrids to use car pooling lanes which allow people to travel more quickly to work. Lastly, lots of insurance companies offer discounts to hybrid cars.

3.5 Technology factor

Hybrid cars are more powerful than they used to be and consume less resource than “regular cars”.

4. Evaluate Toyota’s marketing strategy. What have they done well? Where could they improve?
The Prius second-generation was introduced in 2004, aiming the “early majority” of customers who tend to demand affordable, reliable and proven products as contrasted to the “early adopters” targeted in the 2000 campaign.

As to respond to the American demand for bigger vehicles, Toyota introduced a roomier-mid-size-Prius, which price could be sold at the same as the first generation car’s price due to the achievement in efficiencies in the production process. In order to advertize the environmental benefit as well as the power and size of the second generation Prius to convince the early majority that it was a performance car that happened to be environmentally friendly. Toyota was capable of leverage the connection and a special purchase offer into nearly 1,200 preorder for the next generation vehicle by maintaining relationships with the “Prius Pioneers” who purchased the first generation car. Toyota go on with work to educate the early majority and mainstream customer on how hybrid vehicle technology works by turn over television spots reminding customers that the Prius does not need to be plugged in.

5. What are the advantages and disadvantages of being an early entrant into the hybrid market?

5.1 Advantages

5.1.1 Preemption of scarce assets

The first entrants have superior information; Toyota is able to buy assets at market prices below those which will overcome later in the evolution of the market. As stated by Gilbert (1982) preemption of product characteristics space and geographic, in many markets, there is only room for a limited number of profitable firms; the first entrants could often go for the most attractive niches and might be able to build up strategic actions which limit the number of room available for subsequent entrants. Positions in geographic or product space can be built by first entrant so that the latecomers realize it unprofitable to occupy.

5.1.2 Switching costs and buyer choice under uncertainty

Late entrants have to invest extra resources to lure consumers away from the earlier firms Klemperer (1982). Buyer choice under uncertainty, buyers might rationally stick with the first brand they encounter that performs the job satisfaction. For those who individually benefit of finding superior brands is seldom great enough to evaluate the additional search costs that must be incurred. It could pay off for corporate customers as they purchase in large amounts. If the pioneers are capable to achieve significant customer trial, it could define the attributes that are perceived as important within a product category.

5.2 Disadvantages

5.2.1 Resolution of technological or market uncertainty

First entrant firms have to deal with the entire threat associated with creating a brand new market, as well as the technological uncertainties which will follow. As indicated by Porter (1976) late entrant firms are not suffering from these risks, mostly monetary, with creating a new market. While first entrant firms come up with nothing in deciding potential revenues and firm sizes, late entrant firms are able to go along with industry standards and adjust accordingly. The first entrant firms have to take on all the threats as these standards are set, and in some situations they do not last long enough to operate under these standards.

5.2.2 Shifts in technology or customer needs

When the early entrants does not have the ability to adapt quickly with the change in the customer needs, and also when other rivals firms develop a more efficient, and sometimes less expensive products, the late entrants have a lot more opportunities to assess a market need which will replace what is currently being offered.

5.2.3 Free-rider effects

Late entrant firms have the ability to learn the first entrant and their strategies and techniques. Late entrant firms might be able to “free-ride” on pioneering firms’ investments in a lot of areas consisting of R&D (Research and Development), buyer education and infrastructure development. This effect’s basic principle is that the competition is allowed to benefit and not incur the costs that the first entrant firms have to sustain. These “imitation costs” are much lower than the “innovation costs” which the first entrant firms needed to spend, and also the profits that the pioneering firms should be enjoying can be cut off.

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