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To give the student the chance of analyzing a company via the help of given case study to narrow the scope for them. This assignment gives the opportunity to students to examine new area of study totally associated to consumer behavior theories however happened in the real life and to completely understand why we need to understand consumers.


A) Students will be capable to examine case study afterward and connect theories to the real situations to learn more and use it in the future.

B) Students are expected to use ONE relevant consumer behavior theory or concept in their case analysis of the given case study.


i) Executive summary or abstract.
ii) Introduction.
iii) Body (content or analysis).
iv) Conclusion.
v) Recommendations
vi) References.

Other requirements:

1) Formatting: Arial or Times New Roman, Font Size 12, and 1.5 spacing.
2) Number all the pages of your assignment.
3) At least 10 pages of report.

Case Study: Toyota Prius Marketing Strategies

Toyota manufactures cars, which has a broad coverage from economic minibus to luxurious cars, SUV. The brand on sell comprises Crown, Reiz, Vios, Corolla, Coaster and Prius. And Prius is the brand or car that Toyota has made a noteworthy success in American market. It is a hybrid vehicle. What are the characteristics of it?

Hybrid vehicles have both a gas engine and an electric motor. When starting up or at very low speeds (under 15 mph), the auto runs on the electric motor. At roughly 15 mph, the gas engine kicks in. this signifies that the auto gets power from only the battery at low speeds, and from both the gas engine and electric motor during heavy acceleration. When starting up and operating at low speed speeds, the auto does not make noise, which seems eerie to some drivers and to pedestrians who don’t hear it coming!

Then, have a look back at Toyota’s history to find new Toyota has made its way to America. In the year 1957, Toyota exported to America at the first time and established the selling company. In the year 1984, a joint venture was established with General motor. Co. And in 1997, Prius was first in production and had a launch in America. It was such a great success that Toyota conquered American market. To dig into the reasons, it was largely contributed to the micro and macro environment at that time.

First, let’s have a look at micro-environments. We all know that American love cars so much. And due to oil crisis, Americans changed the need structure for cars, converting their requirements to oil saving cars. While American car manufactures lacked producing such cars, then Toyota caught that opportunity and tried to occupy this niche market.

Toyota’s competitor at that time was Honda. It started to develop the hybrid car almost at the same time as us. It introduced the insight. Afterwards, though it didn’t sell well because of its poor design. As a result, Toyota got the first place in America. Though, Toyota had no competitors in local at that time. GE and Ford were followers later.

In the macro environment there are many young men who love technique and pursue new technology products. And they are as well highly educated and so have a strong environmental protect spirit. And Prius is just the combination of the concepts of environment and technology. Other factors are natural resources and pollution. Before the environment problem and energy crisis come into people’s attentions, Toyota start to research and develop the hybrid cars with a long term view, which was designed to decrease oil consumption and gas emissions.

In a country where everyone was ecstatic when governments increased speed limits above 55 mph, why would the Prius be so successful? For the first model, the answer lies in Toyota’s clever marketing campaign. To start with, it wasn’t aimed at the mass market. Rather, Toyota thought that the first hybrid buyers would be ‘techies’ and early adopters (people who are highly likely to buy something just as it is new). The company was right. Once Toyota recognized the target market, it was able to educate the right consumers 2 years before introduction. The company established a Website to distribute information and set 3-brochures to 40,000 likely buyers just before the introduction. The press was as well excited about the technology. Auto magazines, and even general interest media, ran articles describeing, enthusing, or belittling the hybrids. All of this coverage helped Toyota sell 1,800 cars at once.

In all, Toyota spent $15 million in 1997 touting the Prius. There were print ads in magazines like Newsweek and Vanity Fair; however the bulk of the campaign was in television advertising on channels such as Discovery, the History Channel, the Learning Channel, and MSNBC. Such ads helped to position Toyota as an “environmentally concerned” company and more subtly stressed the technology aspect of the car. After all, Americans love technology and are quick adopters of it.

After introduction, the ads appealed more to emotion with taglines like “When it sees red, it charges”——a reference to the recharging of the battery at stoplights. These ads are based on ambiguity where the headline attracts attention as its meaning is not clear. The consumer must process the information in the ad in order to interpret it. The outcome is higher ad impact and longer ad recall. Toyota as well took advantage of the environmental appeal by sending out green seed cars shaped like Toyota’s logo to prospective buyers on Earth Day. They as well wrapped some Priuses in green and gave away cars at Earth Day events.

Much of the Prius’s success is based on correct recognition of the target market. Many early purchasers were attracted by the technology, start to modify cars, and shared their experiences via chat rooms such as

Even although the Internet played a major part in the Prius launch, Toyota doesn’t sell the car from its Web site. Buyers go to online to look at colors and decide on options such as CD players and floor mats. After that, the dealers get involved, however it takes specially trained salespeople to describe and promote the Prius. Thus, Toyota is planning to launch and educational campaign aimed at sales people and consumers.

Strategies after the year 2004:

Enlarge the market:

A) Launch a new product: As more and more people accepted the new Hybrid vehicles, Toyota decided to enlarge the market, from the market of techies and adopters to a broader market. In order to reach this aim, Toyota launched a new Prius. The new Prius enhanced styling, performance and gas efficiency. It is a sleek, Asian-inspired design comprising seven colors. Within the Prius, there is a stubby switch to engage reverse or drive and a push button that turns everything on. A 7-inch energy monitor touch screen displays fuel consumption, outside temperature, and battery charge level. It as well describes whether you’re running on gas, electricity, regenerated energy, or a combination of these. There are as well screens to show how much electricity you have stored and to arrange your air conditioning, audio and satellite navigation system. The interior is roomy and practical, with plenty of rear legroom. There are lots of storage space cubbyholes and shelves in the front, and also a deep dashboard that leaves ample space for maps, books and even your lunch. The CD player holders six discs.

B) Large promotion: To launch the new Pirus, Toyota spent more than $40 million dollars spread over media in more consumer-oriented magazines and TV. The promotion is successful, as Prius sales are up 120 percent and have reached 28000 units in 2004.

C) Relatively moderate price: Since of the ‘environmentally friendly’ aspects of the car, there are government breaks on the car. The federal government gives a $1500 tax deduction, and some states permit single-occupant hybrids in HOV (High Occupancy Vehicle) lanes. Though the federal deduction will be phased out in the near future, other bills are pending to extend the tax break based on greater fuel efficiency and lower emissions from vehicles. Thus compared SUV cars there are a relative low cost since of the tax relief, and the price is moderate.

D) Raised production from external incentives: Since of the rising gasoline prices, the demand for Priuses increased. Sales of full-sized SUVs like the Ford Excursion and Expedition and the Lincoln Navigator suffered a sharp drop. The raised demand can be seem from the long for 6 months or more waiting lists. Spots on dealer’s waiting lists were even being auctioned on E-bay for $500. Toyota increased monthly production of Prius from 7500 to 15000, however just alleviated the shortages. Throughout this time, the reputation of Prius raised and the sales increased a lot. However, though the excess demand for Prius, Toyota had no plans at that time to begin production at a second plant, perhaps as he couldn’t predict how long this high demand would last. The new Prius made Hybrid familiar to the common consumers, the target of enlarging the market has reached. Though, as the excess benefit exists in this market, there should be competitors coming in, and since of the internal learning curve. What strategies will Toyota make to offend such competitors?

Bring Hybrid to a luxury car level:

After Toyota’s success in Hybrid car, many competitors came up. Honda is the other Japanese automaker. Ford began production of a hybrid model of the Escape SUV, giving consumers a choice of a hybrid or regular model. To promote the hybrid, Ford start an environmental print campaign built around mileage, emissions and other environmental concerns. GM is following the similar strategy, putting hybrid technology in vehicles which use the most gas. It has as well developed a hybrid model of its Silverado truck.

Though so many competitors come up, they are followers. Toyota is still the market leader since of its more mature technology than other automakers and the reputation it made and because Toyota is the first to come into this niche market. In order to keep its benefits Toyota keeps on updating its technology and its Lexus division introduced a Lexus SUV hybrid, moving Hybrids up to the luxury car level.

Therefore, Toyota has a big jump on US automakers who have only dabbled in this market at that time. Therefore hybrid has taken a seat from medium car level to the luxury car level and until now Toyota is updating the hybrid technology and enhancing the performance of the hybrid car. Now the newest model is 2008 Prius model. The effort of Toyota makes common consumers remember Toyota every time someone mentions hybrid.

Now in the car market, most of the people still like stockcar racing, and SUV vehicle is still appealing to people’s taste. However as the gasoline price increases such years and people’s environmental protection awareness hances, the hybrid car that brings fuel efficiency and low emissions will become more and more admired in the future. And the competition will become more and more violence. Thus Toyota should keep on producing hybrid cars and updating technology.

When a new version of Prius which is enhanced from the old one is launched, Toyota as well consider a lot of macro- and micro-environment factors to establish their marketing strategy. Micro-environment factors generally contain the company, suppliers, marketing intermediaries, customers, competitors and publics, while macro-environment factors generally contain demographic, economic, natural, technological, political and cultural environment factors. As for various companies, such factors have different levels of influence. And Toyota as well has some particular factors which are more significant and need closely monitored. We discuss such factors in detail in the given paragraphs.

Micro-environmental factors:

1) The company: The slogan and concept of Toyota express explicitly that Toyota is always pursuing the product which is environment-friendly and fuel efficient. As the prior version, the new version is as well continued to use this concept and the enhanced Prius is in accordance with the company’s image perfectly.

2) Suppliers: There are not some apparent elements changed from the earlier period, thus this factor doesn’t contribute much to the decision making regarding marketing strategy.
Marketing intermediaries. Compared with 1997, the intermediaries are more familiar with the product and can sale it more efficiently. Though, this is as well not a very important factor since it doesn’t change too much.

3) Customers: The customers are more familiar with such new environment-friendly product and accept the concept. From the past promotion and the practical driving experience of customer, they have form a quite stable and growing market for the new version of Prius. This factor is more valuable than the prior years when the product was first introduced to the market.

4) Competitors: Changes in this factor are quite significant to the strategy decision. There arise some competitors in the market, such as Honda, Ford, GM. Thus the competition in this market is fiercer than before. Toyota must monitor its competitors closely and try to predict their marketing strategy and establish the reaction plan. Public’s. Until now, it seems that the public always appreciate Toyota’s concept since Toyota emphasis on the latest technology and environmental protection idea which is in the interest of the public.

Macro-environmental factors:

1) Demographic environment: There are more educated people these days and this trend will continue in the foreseeable future. It is a factor which has no changes compared to prior years.

2) Economic environment: This summer, the price of gas has climbed to the record high level. And the experts predicted that these price rising is not temporary however permanent. This is likely that the price will rise further, so the demand of the hybrid car which can use fuel more proficiently is growing. Toyota’s new product can meet such growing demand exactly. Such changing factor certainly contributes a lot to the decision-making process of marketing strategy.

3) Natural environment: As the resource is limited, it enhances the requirement of the public to find out substitute resource and the need to use the fuel more efficiently. Thus Toyota’s product suits the need of the times well.

4) Technological environment: Toyota has already been the top producer of the hybrid cars and though the other producers are providing the similar products, their technological ability is still far behind Toyota. Though, Toyota requires further enhancing their leading position and keeping up to date about any technology changes.

5) Political environment: This is the most significant factor in the macro-environment. The government has already given the tax incentives to the people who purchase the hybrid car that they can enjoy the tax deduction of $1500 when they buy it. Though such benefit will be out of date recently, there qre more other tax incentives which are under discussion and probably to be approved by the government in the near future. Moreover, some states even provide the exclusive lane for the hybrid car in some highway. All such favorable government policies give more incentive for the public to purchase hybrid cars. Thus Toyota should take advantage of this factor.

6) Cultural environment: Cultural factors are not changed so much and usually the culture of the public shows that the hybrid concept is well accepted.

Marketing Management, Management Studies

  • Category:- Marketing Management
  • Reference No.:- M91995

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