Market segmentation strategies in Toyota's automotive business

Customer segmentation refers to the division of customers in a market according to similarities they share. Such characteristics include spending routines, age, gender, interests among other traits. Segmentation is an efficient marketing tool as it allows the organization to focus on a group of customers in the market. The management is able to use segmentation to allocate adequate resources that address the selected group. The management of an organization use segmentation as an innovation tool. The organization is able to identify the needs of majority of its customers and produce a product aimed for this market. Segmentation as an innovative and marketing tool enables the organization to attract and retain a client base that will support an organization's operation.

Marketing research is among the methods used to evaluate the customers segments in a market. Customer segmentation profiling enables the producer to identify the consumer group to target in the market. From profiling, the management is able to understand the needs of the customers and formulate ways of addressing these needs. Profiling also enables management to understand the efficient ways that the company can use to reach the selected segment. New and old businesses can make use of market segmentation. New businesses can use market segmentation to enter a market while established organization can use market segmentation to maintain their revenue base (Hulten, 2007).

Organizations that use segmentation as a marketing strategy ensure that they produce products for all segments but focus on one segment. The segment may be responsible for high volumes of sales or high revenue generation. Large organizations often focus on the needs of many segments by producing products that cater for each segment. Segmentation ensures that the organization maximizes it potential to attain its goals. The paper evaluates how market segmentation affects the marketing strategy used by Toyota. Toyota is a Japanese car manufacturer that provides vehicles to a global market.

Segmentation

The company is among the major car producers in the market providing a wide range of products. The company uses segmentation to maximize on sales and market domination. The company can categorize its market into various segments depending on the traits of the customers. Concerning income, the company produces products that will cater for the high-income earners, middle-income earners and low-income earners. The market segment can also use fuel consumption as a segmentation characteristic. This is where the company produces fuel-efficient vehicles with low engine capacity, moderately efficient vehicles and high performance vehicles, which have high engine capacities. The company also uses marital status to produce its vehicles. Vehicles for single people compared to cars for couples and people in a large family are other segmentation criteria.

The paper will cover segmentation concerning the income generated by the customers. The cars produced to cater for the three market segments ensure that the company diversifies its income. The high-income earners are few in the market and emphasis on quality. Engine capacity is not an issue in this group with most vehicles having more than 2000 cc capacity engines. The products are expensive and usually produced in limited stocks. Production of new designs in these segments takes place after a long time due to the lack of frequent customers (Epstein, Friedl & Yuthas, 2008).

The middle class segment is comprised of middle-income spenders who spend more than the low-income earners. Pricing for this vehicles is moderate have moderate features. The engine size is about 1800 cc, which ensures that the performance of the vehicle is moderate. The last class is the low-income earners who have the money to spend on vehicles. The vehicles for this segment are cheap and do have low fuel consumption. Owing a car provides extra expenses for the owner thus the need to purchase within the income limit.

Customer segmentation plan

This is the mode of marketing where the organization evaluates the available segments in the market and the effective way to communicate. Communicating to customers for marketing research ensures that the right information is collected. The management can evaluate the use the internet to evaluate the number of customers visiting the website to determine its traffic. Understanding the segment market and the appropriate mode of advertising to use saves the organization money. Toyota's position in the global market is credited to extensive advertising and promotion of its products. The company mainly uses the internet to communicate with its customers. This mode of communication enables the company to market its products over a wide geographical area.

The communication between the customers and company representatives improves brand awareness and customer relations. The company has benefited from the use of the internet to produce products that address the needs of the customer. The internet has enabled the company to penetrate the market, which has promoted sales. The company has been able to venture into new markets by producing products that are suited for a segment in the market. Demand for off-road vehicles in Africa is among the success stories of the company. The demand for cheap off-road vehicles has enabled the manufacture to cater for this niche market and gain a competitive advantage over other companies in the market (Martin, 2011).

In areas where connectivity is poor, the company can invest in television and radio advertisement slots in the local and international channels. The company targets three market segments in terms of income. The targeted segments own television sets or have access to television sets. The advertisements aired before news time for maximum effect. The use of newspaper by the company has also been effective as customers within this segment have access to the media.