T YOTA PRIUS

Secondary Research ReportTexas State UniversityAccount Planning 4316

February 9, 2010

History of the Company

• Toyota was founded in 1926 by Sakichi Toyoda in Japan. However, it was not the car company that we know of today, it was Toyoda Automatic Loom Works. Toyoda sold the rights to the loom and gave the proceeds to his son, Kiichiro, who changed the name of the company to Toyota. He split off the automotive business in 1937 when protectionist legislation improved prospects for Japanese automakers. (Hoover’s, 2010)

Current Sales

In March 2008, Toyota generated revenue of more than $230,000 million, almost 10% more than 2007 (Marketline2010). This increase is due to Toyota’s introduction of fuel efficient and environment friendly cars. In 2009, it was determined that 72% of hybrid sales were from Toyota vehicles.

www.hybridcars.com

Historical Sales

• Estimated Historical Financial Data:• 2005: $36,500.0 M  • 2004: $36,500.0 M  • 2003: $36,500.0 M  • 2001: $36,500.0 M  • 1999: $36,500.0 M  • 1998: $88,086.0 M • 1997: $28,800.0 M • 1993: $25,030.0 M  • 1991: $15,210.7 M • 1990: $12,000.0 M (Gale, Justine Ventimiglia, 2010)

The 4 P’s of Toyota

Products: Currently, Toyota is offers two hybrid sedans, the hybrid Camry and the Toyota Prius. The Prius comes in several models which include the Prius II, Prius III, Prius IV, and Prius V.

Place: They are available to consumers all over the world - Japan, United States, Thailand, Sweden, India, Italy, Canada, Australia, China, England, France, Germany, Indonesia, Malaysia, Mexico, Singapore, South Africa, South Korea, Spain, Switzerland, Turkey, United Arab Emirates, and the United Kingdom. (Hoover’s 2010) Promotion: Toyota’s latest series of commercials for the Prius focus on “Harmony between man, nature and machine.” Also, Toyota has come out with a commercial addressing the recent recalls of the Prius, saying that they are going to fix the problem, and make it right for the consumer. Price: Prius II - $22,800 (usd), Prius III - $23,800 (usd), Prius IV $26,600 (usd), Prius V $28,070 (usd)

Demographics

The typical hybrid driver usually:

• is a few years older than the average car buyer. (around the age of 50)

• has a high income. (43% have an income higher than 100,00)

• has a higher level of education.

• lives in California, New York or Florida.

www.hybridcars.com

Consumer Relationship with Brand

• After the recent recall of the Toyota Prius, consumers might now feel that the brand is less reliable. But hopefully Toyota will fix this problem and regain their customers’ loyalty. According to Edmunds.com, Toyota Prius owners are happy with their cars and love the Smart Key System. They also loved the gas mileage that they are getting with the Prius, and it was also stated that the backup camera is very handy.

Top 5 U.S. Cities with Highest Hybrid Sales

www.hybridcars.com

Pyschographics A 2007 survey conducted by Scarborogh Research

showed that Hybrid drivers are more likely to:• go hiking, skiing, or practice yoga.• eat organic food, yogurt, or drink decaf coffee.• be technologically knowledgeable.

About 14% claim to be Republican, 38% Democrat, and 34% Independent.

The Category• History of the Category From 1997-1999 a group of all-electric cars from companies

such as Honda, Ford, and Toyota were introduced in California. Unfortunately, these cars only reached a few hundred drivers, and after a few years their all-electric programs were discontinued. However, in 1999 Honda release the Insight. This was the first hybrid car to hit the mass market in the United States. In 2000, Toyota released the Toyota Prius, the first hybrid four-door sedan in the United States. In 2002, Honda released the Honda Civic Hybrid. In 2004, the Toyota Prius won several “Car of the Year” awards and increased its production for the U.S market from 36,000 to 47,000. There was a waiting list to purchase the latest Prius. The hybrid car finally established a significant role in the market, the total market share of hybrid vehicles is now almost 3%.

Overall Category trends• Historical size of the category

This chart demonstrates how vastly hybrid sales have increased in the U.S within the past 10 years. Sales peaked in 2007, reaching a total of almost 360,000 units, as a result of record breaking gas prices. The sales have decreased since then, however marketers speculate that the market for hybrid cars will increase in the next few years.

www.hybridcars.com

Overall Category trends

• Current size of category

At the end of 2009, hybrid sales totaled 290,272 units. Although sales were down from 2008, the hybrid still did well amidst a year of recession. The market share of hybrid gas-electric vehicles is now almost 3%.

Current Size of the Category

www.hybridcars.com

Of the hybrid sedans sold in December 2009, the most purchased competitor cars were the Honda Insight, the Ford Fusion, and the Nissan Altima.

Current Size of the Category

Product Units sold in U.S December 2009

Toyota Prius 11,775

Honda Insight 1,639

Ford Fusion 1,556

Nissan Altima 842

The 4 P’s of Marketing for Direct Competitors

• Honda Insight• Product: • Honda Insight LX• Honda Insight EX• Honda Insight EX with Navigation• Place: The places with the highest Honda sales

percent is North America (30%) and Japan (35%).There is a Honda dealership in every U.S state.

• Price: • Honda Insight LX-$19,800• Honda Insight EX- $21,300• Honda Insight EX with Navigation-$23,100• Promotion: The Honda Insight Hybrid markets itself

as the only 40+ mpg hybrid that is under $20,000. The campaign portrays a theme of togetherness and establishes that the Insight is “designed for us all.”

The 4 P’s of Marketing for Direct Competitors

• Ford Fusion Hybrid• Product: Ford Fusion Hybrid• Place: North America has the

highest percent of sales for Ford vehicles (41%). There is a Ford dealership in every U.S state.

• Price: $27, 950• Promotion: Ford is currently

running the “We Speak Car” campaign for the fusion hybrid, which highlights the unique benefits of getting a Ford Fusion Hybrid. The new 2010 Ford Fusion is the most fuel-efficient midsized sedan in America, and recently won Motor Trend’s 2010 Car of the Year award.

The 4 P’s of Marketing for Direct Competitors

Nissan Altima Hybrid Product: Nissan Altima Hybrid Place: The places with the highest

percentage of Nissan vehicle sales is North America (41%) and Japan (23%).

Price: $26,780 Promotion: Nissan does not currently have much promotion going on for the Altima Hybrid. The current promotions for the Altima portray the car as a luxury vehicle for those who want high quality and a great price.

Competitive Creative Analysis2010 Ford Fusion Hybrid• Geared towards customers conscious of gas prices.• Unique Selling Proposition-Promoting Fuel Efficiency• Demonstration-Uses image to show the car is sleek and

stylish while text promotes the product’s practicality. • Brand Recall- Makes use of slogan-”Ford: Drive One.”• Positions itself as more fuel efficient than the Prius.

Competitive Creative Analysis2010 Ford Fusion Hybrid “We Speak Car Commercial”• Targets consumers interested in hybrid cars that are not aware of

Ford’s advancement in the marketplace. • Attempts to make consumers aware of the features of the Ford Fusion.• Positions Ford as the leader in mid-size sedan hybrid technology.• Spokesperson- Aaron Eckhart• Slogan-”We Speak Car, but Do We Speak Hybrid?”• Unique Selling Proposition- 41 MPG, “The most fuel efficient mid-size

sedan”• Brand Recall- Displays the features of 700 miles to a tank and 41

MPG prominently and frequently throughout the commercial.

http:www.youtube.com/watch?v=tGlZ4kdvBkM

Competitive Creative AnalysisHonda Insight Commercial “Let it Shine”• Targets 20-30 yr olds,  looking for a modern yet

affordable eco-friendly automobile• Aims to establish the Insight as a trendy car that

resonates with the “Go Green” movement• This commercial puts the Insight in direct competition

with the Prius, competing for essentially the same target audience

• The commercial is an Image based ad that focuses on establishing the image of the Honda Insight as a trendy car

http://www.youtube.com/watch?v=lyknI5_Wcqs

Competitive Creative AnalysisHonda Insight Print Ad• Target 20-40 yr olds, looking

for a modern yet affordable eco-friendly automobile

• Markets to a broader audience, shows that the Insight 

• The Honda Insight is more marketable to the masses with a more cost-effective price tag than its competition, the Toyota Prius

• Uses a reason why strategy that shows features and benefits of the Insight

Competitive Creative Analysis

Nissan Altima Print Ad•Targets consumers interested in luxury cars•Image- Uses images to show the car as sleek and stylish like a luxury item, such as a watch•Brand Recall- “Elegant Style in the Nissan Altima Coupe”•Positions itself as more luxurious than the Prius

Competitive Creative AnalysisNissan Altima 2010 TV commercial• Geared towards consumers looking for quality

and longevity in a car• Attempts to make consumers aware of the

Altima’s durability• Positions Altima as a durable, luxury car rather

than focusing on the hybrid aspect• Expert Opinion- Displays all of the tests and

research that goes into making a high quality car

http://www.youtube.com/watch?v=VAVzHQ_fZ4o

Competitive Creative Analysis Summary

• Our competitor’s advertising focuses on the practicality of their vehicles while also displaying the vehicles as sleek and stylish. Our competitors use reason, USP, brand recall, and demonstrative creative strategies to market their products. Gas mileage, as expected, is the focal point of hybrid advertising and is the unique selling proposition of a majority of the advertising. However, the advertising tries to inform the consumer that they don’t have to sacrifice the convenience of a mid-size sedan for the benefit of gas mileage. The advertising targets environmentally conscious consumers and consumers looking for a better overall value in a vehicle.

SWOT AnalysisStrengths:- better fuel efficiency than other similarly sized cars.- comfortable and quiet ride; smooth acceleration and braking- spacious- high scores in safety tests- customer satisfaction- low pollution/emissions

Weaknesses:- remains reliant on fossil fuel- more expensive than other similarly sized cars- specialist needed for servicing, repairs, etc.- peak performance less than other similarly priced cars.

Opportunities:- evolution into a "Plug-in Hybrid" with higher capacity batteries and a drivetrain designed to operate for extended periods in electric-only mode.- spread into other market sectors (already happening at the top end with Lexus hybrid models)- Increasing awareness of environmental issues likely to keep demand high.- licensing of technology to other manufacturers who may be getting wrong-footed by the market demand for "green" cars.- governments seeking to meet Kyoto targets etc. may give incentives for cars such as the Prius with lower emissions (already happening in many places).

Threats:- various rumors may serve to decrease credibility or consumer confidence... e.g. "I heard..."- dilution of market share as competitors introduce more "green" cars, particularly if it is overtaken by an even "greener" car.- if fuel prices fall significantly, consumer interest in fuel economy may wane.