Marketing analysis and strategic applications

Marketing Analysis

Toyota Fights to Regain U.S. Traction

From a cursory analysis it would appear the global economic recession was responsible for Toyota, Lexus and Scion sales shortfalls in the first six months of 2009. Yet the article, Toyota Fights to Regain U.S. Traction (Kiley), illustrates there are more fundamental weaknesses within the global auto manufacturer's product development, inventory management and sales processes that are also contributing to their reduction in sales. In the first six months of the year Toyota sales are down 39%, Lexus sales were down 34%, and Scion sales down 66%. Scion, which had an exceptionally successful product launch and had dedicated floor space in dealers, was the most troubling to Toyota senior management teams. During the first six months of 2009 it had also become apparent that the Lexus ES330/350 sedan and RX350 line were now accounting for two-thirds of sales of that brand. With sales continuing to drop, the Toyota senior management team chose to assign Yoshimi Inaba to lead the U.S. management team and devise a turnaround for the company. Mr. Inaba has previous assignments in the U.S. And is expected to analyze how Toyota can better serve dealers by delivering more attractive models and also increase the speed of new auto development. The article points out that Toyota's pace of new product development has fallen behind Hyundai, Honda (HMC), and Ford.

Analysis of Toyota's Strategy in the U.S.

Toyota's dominance of the U.S. auto market is attributable to their market share in the sedan segment, the market the Toyota Camry was specifically developed for. Toyota, through a strong commitment to reliability, quality and value, has created an exceptional brand across multiple served auto segments as well. Where Toyota began to misread and misinterpret customer needs was first in assuming that sedan sales would continue to grow. This led to the development of successively higher levels of manufacturing capacity. Second, Toyota began creating multiple product lines, which caused confusion over each model's differentiated market position. Third, Toyota had found that their models, while generating loyal customers, were failing to attract new ones. All of these factors contribute to the sales shortfall the company is experiencing today.

Critique of Toyota's Strategies in the U.S.

Toyota had to an extent become complacent in the U.S. And began believing that their exceptional growth would continue. Second, Toyota had forgotten to stay in tune with its dealers and work to provide them with more exciting models they could get customers to purchase. Third, Toyota's model proliferation had created confusion most likely internally as well as within the dealer channel. The differentiation of one model from the next was increasingly difficult to define. Toyota had continued to gain market share due to its exceptional new product introduction and product launch processes. Yet auto maker found itself six months into 2009 struggling to keep sales from dropping further, and seeing Hyundai, Honda (HMC), and Ford all generate new auto designs and launch them faster. All of these symptoms taken together pointed to a more fundamental issue for Toyota, and that was they were losing touch with the unmet needs of customers and the pace of customer's preferences changes over time.

Summary and Recommendations