Prius Abir

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Sales Strategy of Toyota Prius in India Keeping the booming automobile industry in India as its main target, Toyota had big plans to market and to sell its hybrid, Prius. With a marketing budget of $25 million, Toyota had a target to sell more than 50,000 of its hybrid variant in India. Prius, a midsized hatchback which was initially a compact sedan, is rated by the US Environmental Protection Agency as one of the cleanest vehicles sold based on pollution and toxic emissions. Thus a communications strategy based on this fact was created which will interact with the target market. The strategy used Direct Mail, Radio, Television, print and billboards and a creative strategy was designed on the basis of marketing concept which relied on understanding the needs and wants of the customer and delivering them the designated level of satisfaction better than its competitor. Target Market Prius belongs to the lower/medium passenger car segment and has the advantage of being the first mass produced hybrid car. Its only competitor is the Honda Insight but the latter is a two-seater sports car and thus fails to provide the level of comfort of the former. The Indian market for Toyota’s hybrid car can be divided into two major categories i.e. Business buyers (B2B) and Consumer Buyers (Private Buyers). Business buyers consist of customers who either by the car for hire/rental purpose or for the company fleet. Because of low operating cost the Prius becomes an appealing choice for Toyota’s business buyers. Car dealers are also customers but they do not have a free will and they have to

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Sales Strategy of Toyota Prius in India

Keeping the booming automobile industry in India as its main target, Toyota had big plans to market and to sell its hybrid, Prius. With a marketing budget of $25 million, Toyota had a target to sell more than 50,000 of its hybrid variant in India.

Prius, a midsized hatchback which was initially a compact sedan, is rated by the US Environmental Protection Agency as one of the cleanest vehicles sold based on pollution and toxic emissions. Thus a communications strategy based on this fact was created which will interact with the target market. The strategy used Direct Mail, Radio, Television, print and billboards and a creative strategy was designed on the basis of marketing concept which relied on understanding the needs and wants of the customer and delivering them the designated level of satisfaction better than its competitor.

Target Market

Prius belongs to the lower/medium passenger car segment and has the advantage of being the first mass produced hybrid car. Its only competitor is the Honda Insight but the latter is a two-seater sports car and thus fails to provide the level of comfort of the former. The Indian market for Toyota’s hybrid car can be divided into two major categories i.e. Business buyers (B2B) and Consumer Buyers (Private Buyers). Business buyers consist of customers who either by the car for hire/rental purpose or for the company fleet. Because of low operating cost the Prius becomes an appealing choice for Toyota’s business buyers. Car dealers are also customers but they do not have a free will and they have to sell the car that Toyota produces therefore the number of these ‘customers’ can be set by the company.

Objectives and Targets

The following were the main objectives and targets of Toyota in India with respect to Prius:

To strengthen the bond of Indians with the Toyota Prius To enhance the attention towards Toyota Prius when a customer is

planning for a new car purchase. To grow the target market and enter into other market segments and

reach them as much as possible

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Business buyers and Consumers (private buyers) have to be informed about the new product and brand name.

Create awareness of by educating customers of hybrid cars and advantages of having a Prius.

Target markets should be thrilled about the new technology driven Prius and reach to others by word of mouth.

Communications should prompt users to learn more about the new Prius; see the

Website, order a test drives etc. The Prius ought to be looked at as a total and sensible alternative to

conventional cars. At last communications should result to a purchase, a more eminent

percent of showroom visits should be turned into sales.

As this product was new in India are no trendsetters for this product and also historical data is not available that would allow forming an idea what is possible or realistic or what is not. For example the Prius has been launched in Japan since 1997, but it was a different market with a different environment and therefore only to some degree of valid similarities as compared to the EU and UK market. To check if all or some of these objectives are met post campaign research should be started at regular intervals.

Market Strategy

Year 2000

The first generation Prius for the Indian market was released in 2000 with increased power to both the internal combustion engine and electric motor. This new Prius met Indian emissions standards and included a lighter battery pack. Indian consumers still found it to be overpriced and underpowered and burdened with other limitations including rear seats that did not fold down.

Toyota hired Ogilvy and Mather India to help them advertise and position the new Prius. Working with these firm, Toyota realized that they needed to communicate not only the Prius' environmental advantages but also communicate how desirable and practical it was for regular, everyday transportation. The "PRIUS/genius" campaign launced as the result of this combined effort.

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Starting two years before the Prius was available in India, the campaign began by creating a dialogue with customers that resulted in 40,000 people expressing an interest in the Prius. These prospects were given early access to a private web site and were able to pre-order the Prius, which 1,800 did. The campaign then continued onto a more traditional form using broadcast and print advertising and continued to combine interactive, outdoor and lifestyle marketing.

However, this early Prius did not stack up based on either features or price compared to its competitors and the marketing campaign heavily emphasized the car's green aspects. Toyota had only succeeded in selling to an audience of innovators and a limited number of early adopters who were drawn to the technology and willing to take a risk.

As a result these initial marketing efforts failed in their attempts to produce mass appeal and only 15,000 cars were sold in 2001 and approximately 20,000 were sold in 2002. Crossing "the Chasm" (see Technology Adoption Lifecycle below) was going to require further innovation and a different marketing strategy.

Year 2004

It wasn't until the next the next generation Prius debuted in late 2003 for the 2004 model year that began to take off in India. The new Prius was larger, had a more efficient drive train yielding improved mileage, and finally responded to earlier demands

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for a large cargo area with rear seats that folded down. Toyota had listened to its Indian customers and met and exceeded their expectations.

During this time, the Honda Civic Hybrid actually had higher sales than the Toyota Prius. Instead of focusing on technophiles and early adopters, Honda introduced the Civic Hybrid directly to the mass market by taking advantage of Civic's existing brand equity and marketing it as having the added benefit of increased petrol mileage. The turning point for the Prius was triggered by it now being feature competitive with similar cars and by the new marketing campaign that shifted from a focus on early adopters and environmental friendliness to the mass market and economic benefits. "The Chasm" had been crossed and the Prius was in high demand. In a 2007 survey was published that reaffirmed Toyota's new marketing strategy. It had found that 73% of Prius owners acted like mass market consumers and that the Prius appealed to high-income buyers.

Year 2010

In 2010, Toyota launched their new ad campaign in India entitled "Harmony between Man, Nature and Machine." It emphasizes that there are no longer any tradeoffs between getting the features they want in a car, and getting high mileage to reduce CO2 and save the planet. This campaign aims to reach a wider mass audience than previous campaigns and includes a larger role for social media including Facebook and Twitter. The sales goal for 2010 is 180,000 units, up from 150,000 in 2009, and a huge leap from the scant 15,000 that were sold in 2001.

Analysis

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The Toyota Prius holds 50% of the market for hybrid vehicles in India. That means that the combination of all other hybrid vehicles including the Camry, Civic, Escape, Highlander and Insight, together just match the sales of the Prius, and Toyota owns well more than half of the total Hybrid market. It stands out that a significant majority of buyers surveyed felt that the Prius was less expensive than alternatives. In fact these respondents were more likely to purchase a BMW, Mercedes or other luxury car if they didn't purchase a Prius. A full 71% of the respondents stated that the fact that Prius was only available as a hybrid was either important or a very important part of their decision process. Toyota used penetration pricing strategy in order to build market share rather than skim pricing strategy of setting the price high initially and then dropping it as competitors entered. This was effective in gaining and holding onto market share.

In every other case, buyers have to make a choice between a less expensive standard engine vs. a more expensive hybrid model, and each looks virtually identical. In fact, in some cases (e.g. the Honda Civic Hybrid) the storage space is significantly less than the non-hybrid version, causing the buyer to confront an obvious sacrifice.

In India, Prius created customer value by:

Saving on fuel cost Saving time spent filling up with gas Generating Peer to Peer Buzz -- as it is immediately recognizable Leveraging Toyota's Reputation for excellent reliability Providing public (environmental) benefits without requiring a sacrifice

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An insight from this analysis is that you can't design an inferior product and expect to make up for it by being eco-friendly. Another is that while marketing to eco-friendly and early-adopter segments can produce some traction, sales won't really take off until there is a compelling message for the mass market. Moreover if an automobile is successful in a economically strong country like India, it does not mean it will be the same in a third world developing country like India. However the Prius has also shown that by meeting a wide enough set of customers needs creating a broad appeal, coupled with strong branding, it is possible to cross over and successfully sell a product in multiple market segments.

Recommendations

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When developing a green product, make sure that it is feature competitive even without its green aspects. Then when marketing the product, realize that most sales will be made regardless of its eco-friendliness. However, if you can establish some cachet around the product, people may buyit as luxury good for the environmental status it conveys, as long as the product is distinct and highly recognizable.

In order to enter new market like India, Pre-testing is a vital step especially for a totally new product, to check if the message conveyed is conceived as intended by the prospect buyers. Testing will help to determine the optimal combination and dilute the risk of failure in general. Trying out with trial audiences who present the general public and the target audience should include conception, modern-fashion and innovative strategy of all intended communications and performances. A share of the financial budget must be appropriated for pre-testing. Direct mail should be one of the commencement activities with pre-launch consciousness letters being sent to existing Toyota customers; those who fit in the target group description (Because 40% of buyers in USA & Japan previously owned a more expensive car).

Toyota can also buy more information databases about Indian consumer behavior from media that their target has subscribed to (e.g. Times of India, as far as legally possible) and then filter among them with target demographic profile given above. A second beckon of direct mail upon the launching with more distinct data should follow and officially declare the launching of the Prius. On this occasion the audience should be given the chance to either pre-order the car (benefit of Toyota loyalty) or request a test drive at a local dealer.

Local dealer’s own mailing efforts will be tested here. Direct mail should also be sent to business buyers, which are needed to be admitted in Toyota’s database. Their mailings should be custom-made to underline the characteristics that are important for bulk buyers. Direct mail should also be used in the form of email to underline the Prius present-day image. Emails could be planned to change to directly pre-order the car and purchase the car online, something that would invoke to initiate the mind-set. Newsletters should include detailed pamphlets and eventually a CD-Rom. Positive public relations are going to be created by press releases and press conferences. These can be used for the launch and early phase of the Prius to raise consciousness and produce interest for the new product. The public must also be educated about the Prius’ working and advantages. Strength will be increased when public relation appears in media consumed by the target market prospects. Taking into account the Prius revolutionary

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technology media will be eager to talk about this product because of speculation from the audience and even a certain number of called for coverage could be anticipated. The Prius will be displayed in suitable shows and expos in the automobile industry to start some talks about the Prius and this will prepare the market. Advertising is one of the most important communication methods along with personal marketing. The use of TV ads, Print media, Internet seems most hopeful to reach and affect the target market segments.

The strategy is to use slightly different executions among each of the three mindsets as discussed by their individual media. Advertising will go through different stages to aware, educate and interest the target audience and then hopefully result in a dealer visit. Personal marketing as discussed above is very essential to win over both business buyers and customers (private buyers) in the car market.

We urge a communications strategy that makes use of advertising, personal marketing, new media and direct mail, radio and television. Personal selling will be rendered by the existing network of local dealers.TV will be used for advertisements and Print Outdoor media to initiate the purchases. The Internet will play a significant role for both advertising and direct mail, using a modern medium to emphasize the encouraged character of this car. However that this plan so far is only a advertisement plan, and not definitive, it can mould especially if pre or post-testing give damaging results and according to its result will be taken appropriate steps to overcome those obstacles. Before making the suggested action a long designing period with frequent meetings of all parties is essential to insure the unity and whole contents of the plan.

Budgeting

Before the product is actually launched the marketing communication should be launch so that at launch they show their full potential. Even long before that all sections that add to the production and communication will have to meet regular interval for an integrated strategy.

Pre-Launch: The arrangement of a site round the Prius will happen once the hybrid car has been shown on exhibitions. Direct mail will be sent before and after the launch. Personal marketing will be allowed barely before and fully after Launch. Once the product is available advertisement will start. TV advertisements will start in a flux

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into a ‘consciousness pattern’ after half-year to maintain consciousness for a product that has a long purchase cycle and takes a longer decision time.

Post-testing (during and after campaign) is vital because it helps to measure the literal achievement of the campaign. It answers the questions such as was the money worth spending over the advertisements, were objective achieved after such long strategy planning. If not where did it fail? Customer feedback also helps when designing next campaigns. Post-testing will be outsourced and will be held by an agency that particularizes in carrying surveys to finding out the public’s reaction to the communications. These tests will include the credit/ consciousness of adverts, recall rate and its influencing power over feelings and attitude towards people. Was the target market segment covered and reached with the right message should also be analyzed. These results can then be equated with results assessed before the campaign commencement to state the effect the campaign had. Budget has to be allocated for this post-campaign testing.

References:

http://books.google.com.pk/books?id=4kDgTS_NSZsC&pg=PR11&dq=advertising+%26+integrated+brand+promotion+5th+edition&hl=en&ei=1m9qTYH6AY7n4Abm9r3fCQ&sa=X&oi=book_result&ct=result&resnum=1&ved=0CCoQ6AEwAA#v=onepage&q&f=false

http://books.google.com.pk/books?id=mbrk4UNxQGgC&printsec=frontcover&dq=advertising&hl=en&ei=YHJqTZmJMKWI4gbB3rTfCQ&sa=X&oi=book_result&ct=result&resnum=7&ved=0CEUQ6AEwBg#v=onepage&q&f=false

http://books.google.com.pk/books? id=fk1rTxRYtY0C&pg=PA44&dq=toyota+prius&hl=en&ei=z3JqTePhD8yR4ga_t6jfCQ&sa=X&oi=book_result&ct=result&resnum=5&ved=0CDYQ6AEwBA#v=onepage&q=toyota%20prius&f=false

Bell, L. (May 15, 2009). New Toyota Prius pushlooks to reach masses. DMNews. Retrieved

from http://www.dmnews.com/new-toyota-prius-pushlooks-to-reach-masses/article/136938/

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Berman, B. (Jan. 20, 2010). December 2009 Dashboard: Year-End Tally. HybridCars.com.

Retrieved from http://www.hybridcars.com/hybrid-sales-dashboard/ december-2009-dashboard.html Geller, M. (Sep. 1, 2000). ANATOMY OF A BUY - Hybrid Campaign for a Hybrid

Car. MediaPost Magazines. Retrieved from http://www.mediapost.com/publications/ index.cfm?fa=Articles.showArticle&art_aid=8882 Gutsa, NH. (Jun. 8, 2009) Marketing Mix in Action. Associated Content. Retrieved from http://www.associatedcontent.com/article/1804334/ marketing_mix_in_actiontoyota_prius.html Hodges, A. (May 18, 2009) Toyota Prius Hybrid Launches 2010 Marketing

Campaign. Retrieved from http://www.newsoxy.com/toyota-hybrid/prius/article11914.html Itazaki, H. (2009). The Prius That Shook the World. Nikkan Kogyo Shimbun Ltd. Klein, J. (2007) Why People Really Buy Hybrids. Topline Strategy Group. Retrieved from http://www.toplinestrategy.com/ Topline_Strategy_Report_Why_People_Really_Buy_Hybrids.pdf J.D. Power. (Mar. 6, 2008). While Many New-Vehicle Buyers Express Concern for

the Environment, Few are Willing to Pay More for An Environmentally Friendly

Vehicle. J.D. Power and Associates Reports. Retrieved from

http://businesscenter.jdpower.com/news/ pressrelease.aspx?ID=2008029 Leonhardt, D. (Jun. 21, 2006). U.S. Hybrids Get