Marketing Toto brand high efficiency toilets in Catalonia

Marketing Toto Brand High Efficiency Toilets in Catalonia

Marketing Plan for Toto Brand

Product Description

The product subjected to this marketing plan is represented by high efficiency toilets produced by TOTO USA. The company is the world's largest plumbing products manufacturer. TOTO's product range includes: commercial and decorative plumbing fixtures and fittings, faucets, accessories, shower and flush valves, lavatories, toilets, Air Baths, and urinals. The company's mission consists in the "integration of performance, conservation, technology, and innovation" (TOTO USA, 2009).

The product for which TOTO is developing the marketing plan is represented by a dual flush toilet equipped with Watersense system. The product is offered in the following models:

Aquia Dual Flush, 1.6 GPF / 0.9 GPF

Aquia II Dual Flush Toilet

Aquia III Dual Flush Toilet

The Aquia Dual Flush is a decorative, high profile two piece toilet. It has an elongated skirted design. The product is equipped with the Dual-Max Flushing System and with a push button style flush option. The toilet is upgraded with an Oval SoftClose seat. The trapway is large, fully glazed, and it measures 2-1/8."

The style is transitional. The toilet has a tank cover, fittings, chrome plated push button. The Dual-Max flushing system, which is a TOTO trademark, allows the customer to choose between 1.6 gallon flush or a 0.9 gallon flush in accordance with the customer's needs. This leads to exceptional water savings.

The pricing is different in accordance with the product's color, as it follows: Cotton - $457, Sedona Beige - $526, Bone - $526, Ebony - $686, Colonial White - $457.

The Aquia II Dual Flush Toilet is very similar with the previous model described above. Its price also starts from $457.

In addition to the features of the two models described above, the Aquia III Dual Flush Toilet is in compliance with ADA accessibility guidelines. The toilet features a seat at 16-1/8" or above from the floor. Pedestal lavatories is at a height of 34" or above from the floor.

In this case, the price starts at $588.

These toilets are equipped with the WaterSense system that was designed in order to help customers identify water-efficient products. This means that TOTO products meet the water efficiency and performance criteria.

The product's competitive advantage is represented by the Dual-Max Flushing System, one of TOTO's trademarks. The flushing system innovated by TOTO is "the leading choice for dual flush performance and conservation because it doesn't sacrifice performance for conservation like many other dual-flush solutions in the market" (TOTO, USA, 2009).

The objectives of this system consist in optimizing water conservation and setting high standards in flushing performance. Even more, the system allows the customer to select the appropriate amount of water usage from 0.9 GPF to 1.6 GPF through integrated control. TOTO's Aquia toilets successfully manage to combine style and efficiency.

Goals and Strategy

TOTO is recognized in the United States and across the world as the leader on the dual flushing toilets market. TOTO has chosen Catalonia as the new region where the company will export its products.

The company's marketing strategy will be centered around the advantages provided by TOTO's products. The main advantage consists in water saving, thus efficiency. TOTO believes that the company can gain significant market share by promoting products' efficiency, innovation, and quality, rather than small prices that would create a wrong impression in customers' minds.

Given the fact that TOTO is just establishing its presence on the Catalonian market, the company must first introduce itself to customers in this region, customers that may be unaware of the company's leading performance.

Given the market circumstances, TOTO has established a few realistic goals that can be achieved in the first period of activity:

Increasing brand awareness

Opening three individual shops

Reaching a 15% market share in the first period of activity

Creating a loyal customer data base

Reaching a volume of sales of 2,000,000 after the first 6 months

Projected growth is estimated at:

20% after the first six months

25% after the first year of activity

20% after the second year of activity

Target Market

The geographical market selected by TOTO is represented by Catalonia, Spain. Catalonia is situated in the northeast of Spain, it covers 32,114 square km, is an autonomous community. Barcelona is the capital city. In addition to Barcelona, Catalonia includes other prominent cities, like: Tarragona, Lleida, and Girona.

The climate is mixed between Mediterranean, continental, mountain and even Alpine. The official languages in Catalonia are: Catalan, Spanish, and Aranese.

Economy

In comparison with other regions in Spain, Catalonia is more industrialized. The primary sector accounts for 2.8%, the secondary sector accounts for 37.2%, and the tertiary sector accounts for 60%.

In 2007, Catalonia reached a GDP of €202,509 million. The GDP per capita reached €24,445. The region reported a 3.7% GDP growth. The financial and economic crisis has not left Catalonia unaffected. It is estimated that the region will report a 2% contraction of the GDP in 2009, when Catalonia will go through a recession period.

The region's economy is very much influenced by the tourism sector, Catalonia being the most important tourist destination in Spain. The banking sector is also very developed in this region. Almost a quarter of the Spanish savings banks are Catalan. Even more, the first savings bank of Europe is Catalan.

The real estate sector in Catalonia is characterized by very expensive houses. For example, for a square meter in this region, the customer must prepare himself for an average price of €3,397. Barcelona is the most expensive real estate market in the country, with an average of €3,700 for a square meter (Wikipedia, 2009).

At a certain point, this may prove to be an important aspect for TOTO. Given the fact that the company is not yet present on the Catalan market, TOTO will have to make an important initial investment. This means the company will have to purchase the spaces for its stores, for the storage warehouses, and for offices also.

The financial crisis had important effects on the real estate sector in all countries affected by the crisis. It is expected that Catalonia will not make an exception. Therefore, as a result of the financial crisis, real estate prices in this region should significantly decrease in the following period of time. From this point-of-view, TOTO's timing for entering the Catalan market is optimal.

Demographics

In 2008, Catalonia reported a population of 7,354,411. Of this total, immigrants account for 12.3%. Immigrants that come here usually come here to work. They work mainly in constructions. Given the financial crisis and the fact that Catalonia will go through a recession period, it is likely that many jobs owned by these immigrants will be cut, forcing them to return to their home countries. This will reduce Catalonia's population and obviously it will reduce the potential number of customers for TOTO.

Targeted customer segment

For the new Catalan market, TOTO has identified two main customer segments that the company intends to address through its products:

Customers aged 30 to 40 with medium incomes

Customers aged 41 to 55 with medium incomes

The first targeted segment of customers is represented by individuals aged 30 to 40 mainly, with medium incomes, individuals that are currently building their house, or that just bought an apartment that needs new furniture. This includes toilets.

These customers are educated, they tend to have a more eco-friendly lifestyle, and this attitude is reflected in the things that surround them, including their toilets. These customers are oriented towards reducing the water consumption. This is where TOTO holds the best advantage.

However, the company's products are not cheap. This is why the company is orienting towards customers with medium incomes. If these customers are willing to put an extra effort into saving water, they will be willing the pay the price that comes with these products.

The second customer segment that the company intends to address in the Catalan market is represented by individuals aged 41 to 55. This customer segmentation refers to customers that are replacing their old toilets with new, more efficient ones. Water waste is a concern for them also.

Their incomes are medium to high, in order to match the quality and prices of the products offered by TOTO. In this market, the company will address the issue of water consumption, water waste, and water saving.

The issue of water saving is the common feature that characterizes the prospective customers that TOTO intends to address on the Catalan market. The efficiency regarding water saving represents the competitive advantage that the company will exploit in order to gain a market share that will prove to be supportive for the company's activity in the future on this market.

The possible risks that come with this market are influenced by the financial and economic crisis that will affect Catalonia in the following period of time. As mentioned above, the region will experience a recession period, when the economy will contract.

The region's flourishing economic situation until now was also reflected by the size of the construction market. The region's labor force was unable to cover the needs of the construction activity, which allowed for many immigrants to come and work here in the constructions sector.

But with the new economic conditions, it is expected that the level of constructions in the region will significantly decrease. New constructions mean new customers for TOTO. Less construction means less customers for the company.

Also, given the new economic and financial circumstances, it is expected that individuals' in comes will experience a decrease. This means that they may not invest in purchasing new toilets unless they absolutely need to.

In other words, the global economic and financial conditions that are also reflected in Catalonia may affect the company's initial sales on this market. The company's estimations regarding the volume of sales may prove to be optimistic.

However, a marketing campaign and a pricing strategy in accordance with the new economic and financial requirements of the market might be able to counteract these risks, or at least to significantly diminish them.

Competitors

The company's most important categories of competitors on the Catalan market include:

Local manufacturers

International manufacturers that are already present on this market

Potential American manufacturers that might take into consideration TOTO's intention of addressing this market and follow this direction

On the Catalan market, the leaders are represented by local manufacturers, even if they are small companies. Their advantages are numerous in comparison with TOTO. They benefit from local, cheaper labor force. This is reflected in the price of the products that may be significantly lower than that of TOTO's products.

Their production costs are also reduced by the fact that transportation costs are significantly lower that those in TOTO's case, given the fact that they are local producers. Also, their connections with the Catalan market are different than the connections that TOTO might be able to establish.

Also, local manufacturers are definitely favored by the customers in this market, especially during the financial and economic crisis that the region is traversing currently. Customers on the Catalan market might be determined to support the local economy by purchasing products manufactured in this region.

Being the leaders of this market, such companies will implement a leader strategy. They will benefit from the fact that their products or the brand are well-known by the customers in this region. They will afford to introduce lower prices for their products.

As mentioned above, they are well-known to local customers, which means that they do not need to invest impressive amounts of money into advertising campaigns. They will also afford to introduce a series of promotion that might help the customers decide when buying this type of products.

Another category of competitors is represented by international companies that are already present on this market. They do not benefit from the same advantages as local manufacturers, but they still hold plenty of advantages in comparison with TOTO.

They are the followers on this market and their strategy must be in accordance with their position on the market. They cannot afford to practice the same prices that local manufacturers practice because they do not benefit from the same reduced production costs.

Substitutes

Given the economic and financial distress that affects everyone, as mentioned above, it is expected that customers on the Catalan market might shift their purchasing interests from toilets to other items that they need more. For example, they might choose to buy furniture or electrical and electronic appliances instead.

They might also prefer to save their money in a bank instead of spending them on items like toilets for the moment. During such economic conditions, people tend to satisfy their primary and secondary needs mainly, and postpone tertiary needs until they can better afford it financially.

Price

The pricing structure for TOTO's products on the domestic market is the following:

Aquia Dual Flush and Aquia II Dual Flush Toilet lowest price is $457

The average price is $526

The highest price is $686

In other words, for the Aquia Dual Flush and for the Aquia II Dual Flush Toilet the price starts at $457. For the Aquia III Dual Flush Toilet the price starts at $588.

These prices may not be suitable for the Catalan market. Customers' living standards in this region may be lower than that of the customers on TOTO's domestic market. Therefore, the company must adapt the pricing strategy to the financial possibilities and the economic conditions in the Catalan region.

The economic and financial crisis has already reduced the incomes of Catalan customers and it is expected that these incomes will decrease in the following period of time also.

The recommended pricing structure for the Catalan market is the following:

Starting price - €357

Average price - €426

Highest price - €686

However, these prices might still sound too much for Catalan customers given the fact that the company is not known to these customers that do not know what to expect from the company's products.

The company cannot lower the price below a certain value. The production costs must be covered. The profit obtained from commercializing these products on the Catalan market must be satisfying in order to justify the effort.

When establishing the price for its products, the company must take into consideration the entire initial investment made for opening a branch in the Catalan region. If the company reduces the prices too much, even if it will generate a certain level of profit, the investment and this market selection may prove to be unworthy of all the effort.

However, in order to gain a solid customer base from the beginning, the company can introduce a series of promotions or special offers that could attract customers easier. For example, the company could offer the following special services:

Free of charge installation

Free of charge repairing for a longer period of time

Free transportation

The profits generated by this business in the first period of activity must help sustain the activity in the future. Therefore, the company cannot lower its prices very much. Also, lower prices for the company's products might induce the wrong idea. Usually, low prices are associated with low quality. But this is not the case here.

Channels of Distribution

In order to ensure a better distribution of TOTO's products in the entire region of Catalonia, the company will sell its products in the following locations:

TOTO shops

Specialized shops

Hypermarkets

Fairs

It is important that the company opens its own shops in the three important cities of the region. This will show that the company is a powerful one, with important resources, a company that cares very much about quality and presentation.

As mentioned above, the economic and financial crisis determines a reduction of prices in the real estate sector. The company could exploit this advantage when purchasing the required spaces in this region.

It is recommended that the management of each shop is a local one. Local employees are not bothered by any cultural or language barriers. Also, they are used with the local customers and know how to handle them. They also know how to handle their subordinates. This would not interfere with the control that the company must exert on its foreign locations.

Another variant is represented by commercializing the company's products in specialized stores that commercialize many brands, local and international. This would help the company reduce certain distribution costs. At the same time, the company's products could benefit from extended geographical coverage.

Like all other local or international brands, TOTO can commercialize its products in hypermarkets also. This is a good way of attracting prospective customers in the future. Customers who come in supermarkets do not just buy the things they need, but they also search for items they intend to buy in the future.

This way, they can observe novelties in the field, hey can compare prices, they can benefit from suitable information. This would help them make a better decision when they establish to buy the respective item.