Toyota Hilux: Challenges faced by South Africa’s

legendary one-ton pickup in sustaining market

leadership

Teaching Case Study

Research Dissertation

Presented to

The Graduate School of Business

University of Cape Town

In partial fulfilment

of the requirements for the degree

Master of Business Administration

Submitted by:

Samenthea Pheko

Supervisor:

Prof Geoff Bick

December 2016

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Plagiarism Declaration I know that plagiarism is wrong. Plagiarism is to use another’s work and pretend that it is one’s own.

Allowing another to copy my work and use it as their own is also plagiarism.

This assignment is my own work. I have not allowed and will not allow anyone to copy my work with

the intention of passing it off as his or her own work.

I acknowledge that working with someone on my assignment is allowed, but only if a mutual effort is

made and different examples and, where necessary, wording are used.

Signature:

SAMENTHEA PHEKO

ARNSAM002 Copyright UCT

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Acknowledgements I wish to thank Calvyn Hamman and his sales and marketing team at Toyota South Africa Motors for

their cooperation and giving up their valuable time to share with me their personal thoughts on the

Hilux market leadership journey.

I also wish to thank my supervisor, Prof Geoff Bick, for his guidance which aided me in completing

this report.

Finally, to my husband, thank you for sacrificing two years of your life to support me on this journey.

Thank you for being my pillar of strength, you kept me going during the difficult times, and without

your unwavering support my MBA journey would not have been possible.

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Abstract

Despite turbulent and challenging business conditions, executives have remained resolute and focused

on achieving superior performance. To stay ahead of rivals, firms have to develop competitive

strategies to gain an advantage and also claim the position as market leader for their selected market.

With many marketing executives seeking the market leadership position for their brands, firms may

engage in marketing warfare to achieve this prestigious status. The ongoing battles with rivals,

particularly challengers, should serve as a reminder to market leaders to remain vigilant and to protect

their position through defensive strategies or by distinguishing their capabilities.

This teaching case study explores the challenges facing one of South Africa’s iconic vehicle brands,

the legendary Toyota Hilux one-ton pick-up in sustaining its market leadership position in the hotly

contested light commercial vehicle segment of the local vehicle market. The case may resonate with

students as a local success story given the prominence of the Toyota Hilux with more than a million

units sold since its introduction in 1969 along with the enviable reputation as being the top-selling one

tonner on the local market 43 times in 47 years. It emphasises the intense competition amongst

participants in the segment and also demonstrates how the Toyota Hilux managed to defend its

position amidst the rivalry, changing customer preferences and corporate reputation threats.

Students will gain a practical understanding and appreciation of challenges faced by market leaders in

sustaining their dominance. This case also reveals the complexities associated with managerial

decision making in selecting the most appropriate strategies to adopt in an extremely competitive

environment such as the light commercial vehicle segment of the South African vehicle market.

KEYWORDS: Market Leadership, Market Leader, Competitive Strategy, Competitive advantage, Marketing Warfare, Brand Promise, Brand Equity, Light Commercial Vehicle Industry

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Table of Contents Plagiarism Declaration ...............................................................................................................................i

Acknowledgements .................................................................................................................................. ii

Abstract ................................................................................................................................................... iii

1 Introduction ....................................................................................................................................... 1

1.1 Automotive Industry in South Africa ......................................................................................... 1

1.2 Competitiveness in automotive industry .................................................................................... 1

1.3 Toyota South Africa Motors (Pty) Ltd (TSAM) ........................................................................ 2

1.4 The Hilux Bakkie ....................................................................................................................... 3

1.5 Hilux the pioneer ........................................................................................................................ 5

1.6 Case Theme and Purpose ........................................................................................................... 5

1.7 Learning Relevance and Objective ............................................................................................. 6

1.8 Limitations.................................................................................................................................. 7

1.9 Case Assumptions ...................................................................................................................... 7

1.10 Research Ethics ....................................................................................................................... 8

2 Literature Review .............................................................................................................................. 8

2.1 Introduction ................................................................................................................................ 8

2.2 Competitive strategy................................................................................................................... 9

2.2.1 Porter’s generic strategies ................................................................................................... 9

2.2.2 The capabilities approach .................................................................................................. 11

2.2.3 Competitive advantages .................................................................................................... 12

2.2.4 Competitive positions ....................................................................................................... 15

2.3 Marketing warfare .................................................................................................................... 16

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2.3.1 Frontal attack ..................................................................................................................... 17

2.3.2 Flanking attack .................................................................................................................. 18

2.3.3 Encirclement attack ........................................................................................................... 18

2.3.4 Bypass attack ..................................................................................................................... 18

2.3.5 Guerrilla warfare ............................................................................................................... 18

2.4 Sustaining Market Leadership .................................................................................................. 19

2.4.1 Market Leadership Strategies ............................................................................................ 19

2.4.2 Warfare: Defensive strategies ........................................................................................... 20

2.4.3 Gaining brand preference .................................................................................................. 22

2.5 Conclusion ................................................................................................................................ 26

3 Case methodology and Data ........................................................................................................... 30

3.1 Case Study Content .................................................................................................................. 30

3.2 Case Subject Selection ............................................................................................................. 31

3.3 Research design ........................................................................................................................ 32

3.4 Data Sources and Collection .................................................................................................... 32

3.4.1 Interviews .......................................................................................................................... 33

3.4.2 Recording devices ............................................................................................................. 34

3.5 Data Analysis ........................................................................................................................... 34

3.6 Teaching note ........................................................................................................................... 35

4 Case Study ....................................................................................................................................... 36

4.1 Introduction .............................................................................................................................. 36

4.2 Background .............................................................................................................................. 36

4.2.1 An overview of automotive industry in South Africa ....................................................... 36

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4.2.2 Light commercial vehicle (LCV) segment in South Africa .............................................. 38

4.3 Hilux Heritage .......................................................................................................................... 40

4.3.1 Toyota South Africa Motors (TSAM) .............................................................................. 40

4.3.2 Hilux “bakkie king” .......................................................................................................... 41

4.3.3 Hilux Tough ...................................................................................................................... 43

4.3.4 Hilux owners ..................................................................................................................... 45

4.4 Marketing Warfare ................................................................................................................... 47

4.4.1 Toyota’s brand promise .................................................................................................... 47

4.4.2 Volkswagen's “Artic Wolf”, the Amarok ......................................................................... 48

4.4.3 Ford Ranger vs Toyota Hilux: It is War! .......................................................................... 50

4.4.4 Toyota sponsors the “Cheetahs” ....................................................................................... 52

4.4.5 Dakar Rally “Challenge Accepted!” ................................................................................. 53

4.4.6 The LEGEND returns ....................................................................................................... 56

4.4.7 A holiday treat “Chocolate Box” ...................................................................................... 57

4.5 Sustaining Market Leadership .................................................................................................. 59

4.5.1 35 Years of Market Leadership and counting ................................................................... 59

4.5.2 Hilux “Brand Heritage” vs Ranger “Forward Momentum” .............................................. 60

4.5.3 2015 Daruma challenge, lets rise to the challenge! .......................................................... 61

4.5.4 NG Hilux (2016) “A new Era of tough” ........................................................................... 63

4.6 Conclusion ................................................................................................................................ 65

4.6.1 Pick- up war to intensify in South Africa! ........................................................................ 65

4.7 Discussion Questions and Assignment ..................................................................................... 66

4.7.1 Session 1 ........................................................................................................................... 66

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4.7.2 Session 2 ........................................................................................................................... 66

4.7.3 Session 3 ........................................................................................................................... 67

4.7.4 Session 4 ........................................................................................................................... 67

4.8 Case Exhibits ............................................................................................................................ 68

4.8.1 Exhibit 1: How Hilux become a Legend! ......................................................................... 68

4.8.2 Exhibit 2: Market Share – Light Commercial Vehicles (LCV) ........................................ 70

4.8.3 Exhibit 3:1Ton Segment Hilux Single Cab and competitors ............................................ 70

4.8.4 Exhibit 4: 1Ton Segment Hilux Double Cab and competitors ......................................... 71

4.8.5 Exhibit 5: 1Ton Segment Hilux Extra Cab and competitors ............................................ 71

4.8.6 Exhibit 6: Competitor Watch: Ford Ranger New Generation (October 2011) ................. 72

4.8.7 Exhibit 7: Hilux dethroned: SA has new top bakkie? ....................................................... 75

4.8.8 Exhibit 8: No fluke, Ranger outsold Hilux again! ........................................................... 75

5 Teaching note .................................................................................................................................. 76

5.1 Case Summary .......................................................................................................................... 76

5.2 Learning Objectives ................................................................................................................. 77

5.3 Teaching Plan ........................................................................................................................... 78

5.3.1 Teaching Plan 1: Single Lessons ...................................................................................... 78

5.4 Discussion Questions (Session 1-5) ......................................................................................... 84

5.4.1 Session 1 ........................................................................................................................... 84

5.4.2 Session 2 ........................................................................................................................... 87

5.4.3 Session 3 ........................................................................................................................... 89

5.4.4 Session 4 ........................................................................................................................... 92

5.5 Supplementary Information ...................................................................................................... 95

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Reference List ......................................................................................................................................... 96

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List of Figures Figure 1.2-1: Overall new vehicle market share-2015 (AIEC, 2016) ....................................................... 2

Figure 1.4-1: Hilux Lineage ...................................................................................................................... 3

Figure 1.4-1: New Generation Hilux (TSAM,2016) ................................................................................. 4

Figure 2.2-1: Three generic strategies.(Porter, 1985) ............................................................................. 10

Figure 2.3-1: Marketing Warfare Attack Strategies. Adopted from: Kotler & Singh (1981) ................. 17

Figure 2.4-1: Marketing Warfare Defensive Strategies. Adopted from: Kotler & Singh (1981) ........... 20

Figure 4.2-1: Overall new vehicle market share-2015 ( source: AIEC, 2016) ....................................... 37

Figure 4.2-2: Battle of the bakkies (source: Ignitionlive,2016) .............................................................. 40

Figure 4.3-1: Hilux Product Timeline ..................................................................................................... 42

Figure 4.3-2: The Invincible Hilux ......................................................................................................... 43

Figure 4.3-3: Hilux Man Up Challenge (TSAM, 2010) .......................................................................... 44

Figure 4.4-1: VW Amarok (2014) .......................................................................................................... 49

Figure 4.4-2: New Ford Ranger (FMCSA, 2012) ................................................................................... 51

Figure 4.4-3: Cheetah's sponsorship ....................................................................................................... 53

Figure 4.4-4: Toyota Hilux team finishes in 2012 & 2013 (source: TSAM, 2016) ................................ 55

Figure 4.4-5: Toyota Hilux & Ford Ranger getting ready for Dakar 2014 ............................................. 55

Figure 4.4-6: 2014 Toyota Hilux vs 2014 Ford Ranger .......................................................................... 56

Figure 4.4-7: Chocolate Box from FMCSA (Dec 2014)......................................................................... 58

Figure 4.5-1: Daruma doll Figure 4.5-2: Daruma doll (Challenge accepted) .................................... 62

Figure 4.5-3: Daruma doll (Target Achieved) ........................................................................................ 63

Figure 4.5-4: 8th Generation Hilux ......................................................................................................... 64

List of Tables Table 2-1: Linkages between literature, Teaching objectives and Questions ......................................... 28

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1 Introduction 1.1 Automotive Industry in South Africa The South African economy is globally integrated and market-orientated with a Gross Domestic

Product (GDP) of R3.991bn in 2015. The manufacturing sector is important to support sustainable

growth in the country and it possesses the highest growth and employment multipliers of all the

country’s economic sectors. The biggest contributor to South Africa’s manufacturing output and one of

the more dynamic parts of the segment is the automotive industry. 7.5% was contributed by the

broader automotive industry to the country’s GDP in 2015 by virtue of its efficient value chain from

downstream to upstream activities, 33.5% of the country’s total manufacturing output was made up of

the vehicle and automotive component manufacturing industries while record automotive export

earnings of R151.5bn in 2015, up substantially by 30.9% from the R115.7 billion in 2014, comprised a

significant 14.6% of South Africa’s total export earnings(Automotive Industry Export Council (AIEC),

2016).

Many multinational firms procure components and assemble vehicles for the onshore and offshore

markets in South Africa. General Motors, Toyota, Daimler Chrysler and Volkswagen (VW), as well as

tyre manufacturers Continental and Bridgestone, all have a presence in the local automotive sector

(Esterhuizen, 2011).

1.2 Competitiveness in automotive industry Vehicles, such as passenger cars, light commercial vehicles, medium commercial vehicles, heavy

commercial vehicles, extra heavy commercial vehicles and buses are produced in South Africa. In

2015 the South African industry offered no fewer than 55 brands and 2872 derivatives of passenger car

models for consumers to choose from making it one the most competitive trading environments in the

world. Car buyers are thus afforded the broadest selection to market-size ratio any place in the world.

In respect of light commercial vehicles, for the same period, consumers had 31 brands with 625 model

derivatives to select from. According to Automotive Industry Export Council (AIEC), 2016, 180

vehicles per 1 000 persons was the vehicle-ownership ratio in South Africa for 2015.

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Toyota SA Motors’ market share in South Africa is 19,9%, and is trailed by Volkswagen Group of SA,

who is then followed by Ford Motor Company of Southern Africa and Associated Motor Holdings

(Automotive Industry Export Council (AIEC), 2016). They have maintained their leadership of the

market in 2015 for the 36th year running. The graph below reflects the share of the market of the top

10 OEMs or importers in South Africa in 2015.

Figure 1.2-1: Overall new vehicle market share-2015 (AIEC, 2016)

In 2015, the Toyota Hilux sold 35 684 units and was the top-selling vehicle model range overall in

South Africa. The VW Vivo headed the passenger car market, ahead of its Polo stablemate. South

Africa’s new vehicle market was dominated in 2015 by light commercial vehicles and more affordable

cars.

1.3 Toyota South Africa Motors (Pty) Ltd (TSAM) TSAM is the main character of the Southern African automotive sector. The benefit of any right to

import, assemble, manufacture and distribute Toyota, Lexus and Hino vehicles and components in the

region are currently at TSAM’s disposal. South African, Namibian, Lesotho, Swaziland and Botswana

local markets are currently serviced by TSAM by means of a variety of imported vehicles and vehicles

assembled at the Prospecton plant. TSAM’s offering also includes the export of their vehicles to 74

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countries. This is ranked in the top 10 Toyota Motor Corporation (TMC) distributors around the world

with reference to production and export volumes. Toyota South Africa (TSA) owns TSAM and TSA

is 100% owned by TMC. (Toyota South Africa Motors, 2013)

Toyota’s heritage in South Africa spans more than 55 years and in that time they have evolved into

Africa’s largest manufacturer, the largest vehicle exporter in South Africa and the South Africa’s

biggest investor in the automotive sector. In addition, Toyota has been market leader in South Africa

for 36 consecutive years. One of the brands in the Toyota’s stable that has helped the company to the

country's most popular automotive brand is SA’s best-selling bakkie, the Toyota Hilux.

1.4 The Hilux Bakkie The first Hi-lux (as it was spelt back then) was introduce around for 47 year ago in South Africa. The

name Hi-Lux stood for High and Luxury, which referenced the high comfort and spec level of the

vehicle, which was comparable to passenger vehicles at the time. It proved to be the bakkie the country

had been waiting for and went to the top of the commercial vehicle sales chart in 1970, the year after

its introduction (Toyota South Africa,2014). In 1973 the 2nd generation Hi-lux model was introduced

and become the market leader, and would start the legacy of its 1-ton market dominance.

Figure 1.4-1: Hilux Lineage

TSAM emphasizes “No other vehicle better describes Kaizen, i.e. continuous improvement like the

legendary Hilux”

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Since then it has been the top-selling one-tonner on the local market 43 times in 47 years, which

is an amazing record as competition has increased significantly in recent period. Sales in South

Africa currently exceed a million vehicles and the Hilux’s model name is the longest-running model

name for vehicles in South Africa.

Now in its eighth generation, the legendary Hilux seeks to extend its remarkable run of 44 years as

SA’s best-selling bakkie on its enviable reputation of “quality, durability and reliability” (Toyota

South Africa,2016).

Figure 1.4-2: New Generation Hilux (TSAM,2016)

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1.5 Hilux the pioneer The Hilux brand is not only known for its durability, toughness, strength, resilience, sturdiness but also

for pioneering so many first in the light commercial vehicle segment in South Africa. Along the way to

achieving this success in the South African market the Hilux has led the one-ton LCV market segment

in innovation in the following ways:

- Hilux offered the first long-wheelbase in 1972,

- Toyota was first to offer the compact 4x4 bakkie in 1980

- the 2,2-litre diesel engine in 1979 was another first for the LCV segment.

- Hilux continued to lead the way in 1984, when it was the first to offer a double cab variant.

- First five-speed transmission for a one-ton bakkie in 1986

- The Hilux was the first diesel 4x4 one-tonner offered in SA in 1989

- First to include ABS brakes in 1998

- Hilux was the first light commercial vehicle to provide dual front airbags in 1998

- The Hilux Raider upped the game in a “first for bakkies”, by offering refinement and safety

features which had never before been on offer in a bakkie

- More recently, in 2015 a world-first for bakkies was introduced – Intelligent Manual Transmission

or i-MT is an ‘intelligent’ manual transmission which assists in eliminating shift shock by

matching engine revolutions to the transmission speed.

With so many “firsts” the legacy of the Hilux bakkie is entrenched in the South African market, but

also under immense pressure as the competitors puts Toyota’s flagship’s dominance to the test.

1.6 Case Theme and Purpose The proposed theme for this teaching case is to assess the challenges faced by the Toyota Hilux brand

in South Africa in sustaining its market dominance over the forty-three years. Furthermore, this case

will also explore some of the complexities of competitive strategy and market warfare along with the

role brands play in sustaining market leadership.

The objective of this teaching case is to afford students a ‘hands-on’ understanding and appreciation of

the challenges faced by market leaders in sustaining their dominance and selecting the most

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appropriate strategies for market leaders to adopt in the extremely competitive environments such as

the South African vehicle market.

The Toyota Hilux market leadership is important as it seek to address the increasing call from students

on the use of local “South African” cases in the classroom. To this aim the case may resonate with

students as a local success story given the prominence of the Toyota Hilux with more than a million

units sold since its introduction in 1969 along with the enviable reputation as being the top-selling one

tonner on the local market 43 times in 47 years, the challenges faced by the iconic one-tonner may

bring to life and maximize their learning.

In essence the case main objective is to immerse students into the key concepts of competitive

strategy, marketing warfare given a very competitive local vehicle market in South Africa, and to bring

them as close as possible to the real business situation.

1.7 Learning Relevance and Objective The Toyota Hilux teaching case is designed to assist students to understand the following learning

objectives:

Consider the factors that influence competition amongst rival firms in the marketplace.

Understand the concepts of competitive strategy, competitive advantages as well as the

different competitive positions occupied by the market leader, market challenger, follower and

niche in the marketplace.

To examine the concept of marketing warfare and its relevance in the contempary business

context and more specifically the South African automotive industry.

Analyse the challenges faced by market leaders and consider strategies that firms can adopt to

sustain its market leadership.

Understanding the importance of building a brand and maintaining it.

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1.8 Limitations As this teaching case is mainly a descriptive single-case study, it is worth noting that the research

findings apply only to this particular case and do not apply to all cases of competitive strategy and

marketing warfare. By adopting a case study approach the researcher has taken care in developing a

relevant and applicable story that highlight the challenging faced by the Toyota Hilux in sustaining its

market leadership in the context of specifically the light commercial segment of the South African

vehicle market.

Additionally, the case is primarily focused on the experiences and strategic circumstances faced by the

firm’s management and, particularly, Senior Vice President: Sales& Marketing Calvyn Hamman.

Accordingly, the knowledge derived herein should not be interpreted as an empirical and unbiased

picture of the organisation or a conclusion of the broader organisational culture.

The teaching case certainly takes on a subjective character and students and lecturers are invited to

consider the business scenario from a management point of view. Only information made available by

the management team and in the public domain has been included in this the market leadership case.

1.9 Case Assumptions All research is based on certain assumptions. The following assumptions are applicable for this

research study:

• Toyota South Africa Motors has been transparent and inviting to the analysis and the research topic and has been forthcoming with material information and supporting documentation in

relation thereto.

• All information that has been provided by Toyota South Africa Motors and its management is accurate and factually sound.

• The interviewees at Toyota South Africa Motors are knowledgeable about the Toyota Hilux bakkie’s rise to market leader and the challenges the brand faced in sustaining its leadership,

and willing to share all aspects of the journey in an honest manner.

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• It was further assumed that Toyota South Africa Motors shall stay a ‘going concern’ during the research and case writing process.

1.10 Research Ethics Harling and Misser (1998), pointed out that the researcher must seek formal approval from the

participating organisation, to confirm that the organisation will “allow the desired case to be written

and be willing to release it”(p.126).

Written permission was sought from the Senior Vice President: Sales and Marketing, Mr. Calvyn

Hamman of Toyota South Africa Motors, for the participation of key employees in the research

process research as well as the organization’s willingness to release the case study for teaching

purposes. The final case draft was submitted to Toyota South Africa Motors and its representatives and

is the final release letter is pending the completion of their review. Furthermore, an ethical clearance

form was submitted to the University of Cape Town, to comply with the requirement of completing the

research project. This assures the participating organisation and the university that the researcher will

and has acted in an ethical manner.

2 Literature Review 2.1 Introduction The objective of this review is to give theoretical context to this Toyota Hilux market leadership case

and to ensure that the learning objectives are met. The teaching case describe a specific example of

challenges faced by legendary Toyota Hilux brand in sustained market leadership in the light

commercial vehicle segment in South Africa.

Accordingly, the review examines the extant research, key theoretical models and paradigms as it

relates to the broader fields of competitive strategy, competitive advantages, competitive positions,

marketing warfare, brand equity and highlight strategies that market leaders can adopt to

remain dominant in their market.

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2.2 Competitive strategy

2.2.1 Porter’s generic strategies Porter (1985) opines that competition determines the success or failure of firms as it determines the

appropriateness of the firm's activities which can contribute to its performance. In his earlier work

Porter (1979) suggested that the nature and level of competition hinges on five forces which include:

potential entrants, the customers, suppliers, substitute products or services and the rivalry among

existing firms.

Rivalry amongst firms is common as firms contends for positions in the market place in which case

firms utilise price wars, product introduction, advertising battles and sales force tactics to depose

competitors. Porter adds that intense rivalry is triggered by a number of factors such as slow industry

growth, numerous competitors that are relatively equal in size and power and high fixed cost amongst

others (Porter,1979). He highlights that this rivalry can be destructive to profitability if it relates

primarily to price (Porter,2008). He proposes competition on dimensions such as product features,

support services, delivery time and brand image as an example may have less of an impact on

profitability since it results in improvement in customer value and a justification for higher prices.

Porter (1985) suggests that firms can influence the forces in their industry through their strategies by

shaping the structure and in so doing shift the rules of competition in this way. He identifies three

strategies to achieve above- average performance: cost leadership, differentiation, and focus. Porter

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(1985) postulates each of these generic strategies involve a different direction to competitive

advantage whicis at the centre of any strategy. In executing its strategy firms need to make a choice of

the type and extent of competitive advantage which it seeks to realise.

Figure 2.2-1: Three generic strategies.(Porter, 1985)

Porter (1996) adds that strategy is the “creation of a unique and valuable position, involving a

different set of activities” (p.68). He goes on to state that competitive strategy is effectively being

different and is selecting a set of activities to produce a certain value. In his view “the essence of

strategy is choosing to perform activities differently than rivals do” (p.64), otherwise he asserts

“strategy is no more than a marketing slogan that will not withstand competition” (p.64). Porter (1996)

further described strategic competition as the process of perceiving new positions that attracts

consumers from established positions or draws new consumers into the market. He postulates that even

though selecting a unique position provides an entrepreneurial edge, it does not guarantee a sustainable

advantage as “a valuable position will attract imitation by incumbents” (p.6). In his opinion a

sustainable advantage requires a trade-off between other positions of the firm for example: “airline can

choose to serve meals which add cost and slow turnaround time at the gate or it can choose not to, but

it cannot do both without bearing major inefficiencies” (p.68).

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Although the competitive forces approach has been hailed for its great contribution to the strategy

development process, it is not without some detractors. Day and Wensley (2013) challenged this idea

claiming that although it is sound advice for businesses seeking advantage with the promise market

share dominance and above average profitability, they are sceptical regarding its pragmatism. The

authors argue that firms are “exhorted to develop distinct competences and manage for lowest

delivered cost or differentiation through superior customer”, it is tall order which firms generally find

difficult to follow. Day and Wensley (2013) suggest that firms that firms first understand the rationale

for the current advantages or deficiencies within their business before making any changes. The

authors assert that without sound analysis, managers are unable to select the best moves to defend or

improve the current position. In their opinion, there should be a balance of two approaches to

determine a firm’s competitive position: customer focused approached that emphases customer

relationships, customer loyalty and customer satisfaction and the competitor centered approach

that concentrates on market share.

In his earlier work Day (1994) suggest that the competitive forces approached places excessive

emphasis on the importance of intense of competition in the industry and market segment in

determining a firm’s profit potential and offers the capabilities approach as an alternative.

2.2.2 The capabilities approach Unlike the competitors’ forces approached that focus on the firm seeking a position in an attractive

market which it can defend against competitors, the capabilities approach by contrast guises for a

defensible competitive position in the hard to imitate, core competencies that the firm has developed

(Day,1994). Prahalad and Hamel (1990) define core competencies as “the collective learning in the

organisation, especially how to coordinate diverse production skills and integrate multiple streams of

technologies” (p.82). In their opinion one of the invisible ways of a firm to gain a competitive

advantage is rooted in developing its core competencies. Prahalad and Hamel (1990) go on to highlight

three distinct features of a core competence: i) it should provide potential access to a wide variety of

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markets, ii) should make a significant contribution to the perceived customer benefits of the end

product and it should be difficult for competitors to imitate.

Day (1994) adds that the main difference between assets and capabilities or competencies is that it is

deeply rooted in the organisational routines practices which cannot be traded or imitated by

competitors. He differentiates between the two related sources of advantages, i.e. assets and

capabilities; referring to assets as resources such as investments, property, plant and equipment and

brand equity which firms accumulate, while capabilities are the glue that holds these assets together

and aids in deploying it in the most gainful manner. Furthermore, unlike physical assets, competencies

do not depreciate as they are used and shared, instead the grow (Prahalad & Hamel, 1990).

According to Day (1994) even if “capabilities are complex bundles of skills and accumulated

knowledge, exercised through organisational processes”(p.38) , its apparent in regular business

activities such as “order fulfilment, new product development and service delivery” (p.38). to this end

automaker as an example can develop their relationship with their dealer network to gain an advantage,

as it would be difficult for competitors to the imitate. The automakers relationship with its dealer

network is important as the dealer serve as an interface with the end customers and therefore influence

the customer experience and service delivery. In addition, the size and the geographical foot print of

the dealer network can provide automakers with a competitive edge if they are able to provide a

superior service to customers with quick turnaround time on vehicle parts availability and wide choice

of dealerships for aftersales services. Although having a large dealer network is beneficial it important

to understand how other competitive advantages can be achieved.

2.2.3 Competitive advantages

2.2.3.1 First mover advantages

The term first mover or market pioneer according to Robinson, Kalyanaram and Urban, (1994) is

typically defined as the first entrant to a new market. Attempting market pioneering involves high

initial cost and risk, but also high potential returns which can be a calculated risk-return trade-off

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(Robinson et al., 1994). Lieberman, Montgomery and Wiley (1988) suggest that first-mover

advantages result from: (1) technological leadership, (2) pre-emption of assets, and (3) buyer switching

costs.

Pioneering carries both advantages and disadvantages. Advantages include the chance of creating

customer loyalty to the new offering and brand. For example if the exposure to and experience to such

offering are attractive or even satisfactory, they may not be incentivised to risk trying something that is

different in the future (Aaker and Joachimsthaler, 2012).Cahill (1996) adds that pioneers earn a

competitive advantage by developing the best preference position for their own product since they play

a pivotal role in the customer preference formation and in effect the pioneer becomes a prototype for

the brands in the category. The author goes on to cautions that a pioneering advantage only materialise

if the first mover succeeds in establishing consumer preferences in the market place (Cahill,1996).

Therefore, later entrants can take advantage of the open field in the event that the first mover failed.

So, the pioneering advantage isn’t automatic and does not necessarily warrant permanent competitive

advantage but needs to be sustained through careful nurturing (Lieberman et al., 1988; Cahill, 1996).

Tellis and Golder (1996)add that market pioneering is not required and neither is it enough for success

and leadership in the long-term. In their opinion being number one does not guarantee an advantage; it

only affords an opportunity. Instead the authors suggest that firms in pursuit of long term market

leadership should rather focus on the five factors of a vision of the mass market, managerial

persistence, financial commitment, relentless innovation, and asset leverage that in their opinion drive

superior performance.

Lieberman, Montgomery and Wiley (1988) highlights that the first-mover disadvantages are

advantages that are assist late-mover firms. In their view benefits include: (i) the ability to 'free-ride' on

first-mover investments, (ii) resolution of technological and market uncertainty, (iii) technological

discontinuities that provide 'gate-ways' for new entry, and (iv) various types of 'incumbent inertia' that

make it difficult for the incumbent to adapt to environmental change.

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Given the high initial cost and calculated risk associated with being first in the market place, some

firms choose to adopt the fast follower approach or in other instances delay their order of entry for

second mover advantages.

2.2.3.2 Fast Follower approach

The fast follower approach refers to firms who choose to rather delay the introduction of their products

than to burden themselves with the initial high cost associated with pioneering a market (Munthree,

Bick, & Abratt, 2006). Besides lower cost firms the fast follower approach also allows firms to test

their core brand in the market before launching a new line extension with lesser exposure. Despite its

benefits the authors cautions that firms the risk of damaging its brand if the introduction is delayed for

too long as consumers may be labelled as a “me too” imitator brand (Munthree et al., 2006).

2.2.3.3 Second mover advantages

With reference to the order of entry into the market, the second or late entrant refers to the firm that

follows the market pioneer in the market. Second movers seek to benefit in the event that the first

brand failed to understand consumer preferences, they could get a preferential positioning advantage

and increase their share(Urban, Carter, Gaskin, & Mucha, 1986).

Hunt and Arnett (2006) add that firms can hold-on to their positions of competitive advantage if they

continually have a relative advantage in access to resources compared to their rivals. The authors

emphasize access to resources that lead to sustainable competitive advantages when they: (i) cannot

be imitated easily, (ii) are difficult to substitute for, (iii) are not easily traded among firms, and

(iv) resist efforts by rivals to leapfrog them through major innovation. These advantages allow firms to occupy different competitive positions in the market place.

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2.2.4 Competitive positions Kotler and Singh (1981) defines a competitive position as the firm’s position in a market or a position

it is attempting to occupy, relative to its competition. All markets are occupied by one or more firms

that enjoy different positions, strengths and weaknesses.

One firm is the market leader, refers to the firm that is dominant in its industry. The market leader

has the largest market share and based on its pricing, advertising intensity, distribution coverage,

technological advance and rate of new product introductions, sets the pace and bases of

competition(Kotler & Singh ,1981; Gilligan & Wilson, 2009). The market leader does not go without

contest and are usually attack by a challenger the firm.

A market challenger refers to firms whose share of the market is slightly smaller and may adopt an

aggressive stance and attack other competitors acquire more market share. These firms are willing to

fight one another and the leader for territory and may even overtake the market leader While

challengers set high aspirations in the market place market leaders may be at risk of falling prey to

complacency and as a result be depose of their dominance. .de Chernatony and Cottam (2009) adds

that such brands can be described as exciting, visionary, maverick, unconventional, boundary pushing,

and trendsetting.

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Market followers on the other hand refer to those firms that adopt a less aggressive stance aimed at

maintaining the status quo (Gilligan & Wilson, 2009). Followers do not wish to rock the boat and “can

play the role of counterfeiter, cloner, imitator, or adapter”(Kotler, Keller, Manceau, & Hémonnet-

Goujot, 2015, p.320).

Lastly, several smaller firms are market nichers that serve small market segments which usually don’t

attract the interest or actions of the larger firms. Kotler et al.(2015) asserts that the key niching

strategies is specialisation. In their opinion market nichers develop offerings that fully satisfy a certain

group of customer’s need which allows them to command a premium price in the process. Not all

niche players are small and even larger firms may choose use niching strategies for certain of their

business units(Kotler et al., 2015).

If firms want to change their position they would engage in what is referred to as marketing warfare.

2.3 Marketing warfare Marketing warfare uses the concepts from military warfare and relates it to marketing battles between

competing companies, products and services in an extremely competitive marketplace(Kotler & Singh,

1981). Ries and Trout (1986) who were among the early advocates for “marketing warfare” add that

the answer to success in the marketplace lies in being competitor orientated to meet the customer's

needs better than any of your competitors do.

Kotler and Singh (1981) add that competitors must define its strategic objectives in each of the

markets it occupies. The authors suggest that in deciding their objective firms need to “choose the

enemy”, whether it is to crush the competitor, reduce its share or freeze its share along with who the

competitor is. Unlike a war where an enemy is "given,", firms are fortunate to choose their enemy. Tzu

(2014) stresses the importance of understanding the environment, “the enemy” and oneself which in

his view is critical to succeed in the battle. He mentioned that: “The one who has a thorough

knowledge of himself and the enemy is bound to win in all battles. The one who knows himself but not

the enemy has only an even chance of winning. The one who knows not himself nor the enemy is bound

to perish in all battles” (p.10).

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Kotler and Singh (1981) suggest that the ‘aggressor” firm can choose to attack its competitors in three

different ways: attack the market leader to gain share, attack firms of similar size who are not

serving their market effectively or attacking smaller firms with limited resources. Ries and Trout

(1986) add that attack or offensive strategies are most suitable for the number two and three

competitors while avoiding the strengths of the market leader and rather attack its weaknesses. Kotler

and Singh (1981) go on to suggest five possible strategies of attack based on the principles of war,

which include a “frontal attack; flanking attack; encirclement attack; bypass attack; and

guerrilla warfare”.

These are illustrated and discussed below:

Figure 2.3-1: Marketing Warfare Attack Strategies. Adopted from: Kotler & Singh (1981) 2.3.1 Frontal attack Kotler and Singh (1981) describes a frontal attack as the strategy used by the aggressor firm to attack

its opponent head-on at its strengths rather than its weaknesses. This attack can manifest itself in the

form of an attacker matching product for product, advertising for advertising, price for price, etc. The

authors highlight that for the attack to be effective the attacking firms need to have an advantage of

strength over its competitor (Kotler & Singh,1981)

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2.3.2 Flanking attack A flanking attack refers to the strategy whereby firms pivots on a gap in the existing market coverage

of the enemy (Kotler & Singh,1981). The authors suggest that attacks against a competitor can be

geographical or segmental. Geographical attacks consist of the challenger identifying sections in the

country which the enemy is weak or not present. While a segmental attack is best described as a

strategy is to uncover market needs not being served by the leaders. Ries and Trout (1986) adds that

that the flanking strategy is the type of action for most companies and is suitable when a company

cannot obtain absolute superiority against the market leader. Flanking attacks are particularly attractive

to challengers with fewer resources as it is considered to have a higher success rate than head on

frontal attacks (Kotler & Singh,1981).

2.3.3 Encirclement attack Encirclement involves launching an offensive strategy against competitors on a number of fronts and

requires “the enemy” to protect their front, sides and rear simultaneously. The challenger’s offering

will mirror that of the opponent and more, to ensure that the offer is unrefusable. It is also seen as an

attempt to disperse the coverage so that competitors brand loyalty is weakened.

2.3.4 Bypass attack The bypass is an indirect of assault strategy whereby the company bypass its competitor through

targeting easier markets. The author suggest that it can be done in two ways: diversifying into

unrelated products and diversifying into new geographical markets for existing products.

2.3.5 Guerrilla warfare Guerrilla warfare, according to Kotler and Singh (1981) is made up of making small, intermittent

attacks in the opponent’s different territories, using conventional and unconventional means with the

objective of harassing and demoralizing the opponent and eventually obtaining concessions. The

authors suggest that firms will employ these tactics through cutting prices selectively, interference in

supply, executive raids, intense promotional bursts and a variety of legal actions against the opponent,

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amongst others. These attacks are normally practiced by smaller firms whose resources are not

sufficient to compete with the market share through frontal or flacking strategies and rather occupy a

small section of the market (niche) which they capture and maintain (Ries & Trout, 1986).

With intensive rivalry and marketing warfare amongst firms for competitive positions and challengers

aggressively seeking to depose market leaders it remains essential that leaders maintain vigilance in

order to sustain their dominance. Smith and Basu (2002) postulates that market leadership in its

extreme form is referred to as market share dominance where leaders and challengers in very

competitive markets are embroiled over incremental gains with single digit market share spread

amongst brand, dominance are interpreted as sustained advantage over a challenger.

Even if market leaders are able to sustain it dominance they still need develop strategies to defend its

position.

2.4 Sustaining Market Leadership

2.4.1 Market Leadership Strategies Kotler et al. (2015) recommends that firms who desire to maintain its position as market leader need to

find ways to either “expand the total market demand, develop plans to protect its market share or

increase its market share where the market size remains constant” (p.301). The authors go on to

highlight that when the total market demand expands the dominant firm usually has the most to

benefit. In their opinion market leaders who seek to expand the total market could consider strategies

that will target new customers that are unaware of the brand, try to “increase the amount, level or

frequency of consumption” (p.301) or identify new and different ways to use the brand.

According to Gilligan and Wilson (2009) add that firms who wishes to expand their current market

share can do this through initiatives which include significant advertising efforts, price incentives,

new product development and geographic or distribution expansion. Whereas firms who would like to

protect or defend their existing market share can do so in a number of ways which include: strong

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market positioning, developing and refinement of competitive advantages, strong customer relations,

in essence the firms seek to gain brand preference over its competitors Aaker (2011).

For this reasons firms who would like to defend their competitive position as market leader can either

choose to use defensive strategies to protect its position and embrace the competitive forces approach

to strategy or instead return to the core competencies and follow a capabilities approach to achieve

superior performance.

2.4.2 Warfare: Defensive strategies Defensive marketing warfare entails engaging in strategies aimed at maintaining the existing market

share position of the firm, where the market share leader defend its position against rivals, but also

challenge itself by critically comparing its products and services with potential new products and

services developed through research (Ries & Trout, 1986). The authors maintain that defensive

strategies requires less effort and resources for market leaders when compared to challenger's offensive

efforts which need to overcome established product loyalty and positive corporate image. Kotler and

Singh (1981) suggest six models of defensive strategies that firms can deploy. These are illustrated and

discussed below:

Figure 2.4-1: Marketing Warfare Defensive Strategies. Adopted from: Kotler & Singh (1981)

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2.4.2.1 Position defense

This line of defense is best described as fortification or “fortified front line”. The authors suggest that

static defense in the business world is apt analogy is that of marketing myopia. The marketing

concept made famous by Theodore Levitt who dispel the myth of the invincible product and

highlighted the importance of business concentrating on customer needs (Levitt, 1960). Evidence

suggests that it would be unwise for leaders who are subject to attack to place all them into building

fortifications around their current product.

2.4.2.2 Mobile defense ("defense in depth'')

This defense strategy refers to attempts by the firm to domain over new destinations that can serve as

centres for defense or counterattack in the future. This is done through market broadening and market

diversification rather than the usual brand proliferation. The authors emphasize that such moves create

"strategic depth" for the firm, which allows it to weather sustained attacks and to carry out retaliatory

strikes.

2.4.2.3 Pre-emptive defense

Pre-emptive defense includes all the attack strategies discussed previously and is known as an

"offensive defense". The authors highlight that companies who enjoy high levels of market assets such

as high brand loyalty, technological leadership, etc. may not be inclined to launch a broad a pre-

emptive strategy. Instead given their strong position and capacity to weather some punishment, may

prefer to entice their rivals’ opponents into expensive and costly attacks that will not result in a benefit

in the long term.

2.4.2.4 ''Flank-positioning'' defense

The flanking position is established by a defender as a hedge against potential threats and uncertain

eventuality.

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2.4.2.5 The ''counteroffensive'' in defense

Refers to a strategy whereby a defender can respond to an attack by mobilizing his reserves and

counterattacking the opponent. Firms in this position can choose to meet the attacker head or

manoeuvring a flank attack or affecting a pincer movement that threatens to dismantle the attacking

formation from the attacker’s base of operations.

2.4.2.6 ''Hedgehog'" defense

This defense refers to the strategic withdrawal of firms by way of consolidating its competitive

strength in the market and concentrating mass at pivotal positions for counterattack. The hedgehog

pattern of withdrawing into consolidated positions fits the marketing operation of counter

segmentation.

If firms choose firms to follow the capabilities approach, one of their focus areas could be to gain

brand preference especially if they have identified their customer relationships and associated brand

equity as a core competence.

2.4.3 Gaining brand preference Gaining brand preference refers to the firm’s brand being preferred over its competitors, along with

achieving clear differences, a strong value proposition and a loyal customer base. This means the

brand needs to be more visible, credible and attractive than its rival in the specific category or market.

For example, the Toyota Hilux being preferred by customers over competing brands such as Ford

Ranger and Isuzu KB in the light commercial vehicle segment.

Ghodeswar (2008) further explains that a brand’s value lies in its functional benefits, emotional

benefits, and self-expressive benefits delivered by the brand that offers value to the customers. Keller

(2006) goes on to highlight that brands are assets in the financial sense. Aaker and Joachimsthaler

(2012) add that well positioned brands can deliver sustainable competitive advantages which allow the

firm to differentiate it from their rivals. According to Keller (2006) the impact of brands is manifested

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at three levels—customer market, product market, and financial market. The added value accrued on

products and services by the latter benefits is often called brand equity.

2.4.3.1 Brand Equity

The American Marketing Association describes a brand as “a name, term, sign, symbol, or design, or a

combination of them intended to identify the goods or services of one seller or group of sellers and to

differentiate them from those of competitors” (Kotler et al., 2015,p.41). Keller (2006) adds that a brand

isa a product or service whose dimensions separates it from other products or services that is

engineered to address the same need. He explains that the difference may be functional, rational, or

tangible related to the product performance of the brand. It may also be symbolic, emotional, or

intangible related to what the brand represents or means in a more abstract sense. Chernatony (2001)

adds that brands are identifiable clusters of functional and emotional values and although brand values

can be built through communication, he mentions that the organisation's culture is an important

contributor to a brand's functional and emotional values.

Hoeffler and Keller (2003) advise that the brand’s equity should be derived from the words and

actions of customers. The authors assert that the customer role in indispensable as they decide with

their purchases the equity of brands compared to other brands. In addition, Keller and Lehmann (2003)

suggest that there are six key aspects or dimensions that affects customer’s responses in the

marketplace to the brand. These include amongst others: price premiums, prices elasticities, market

share, success of product launches and category extensions and cost structure, i.e. the ability to reduce

marketing program expenditure.

Aaker (1996) identified four factors that contribute to building equity in the brand as i) brand

awareness, ii) brand loyalty, iii) perceived quality and lastly brand associations.

Brand awareness is significant as customers prefer the familiar. With perceived quality is a type of

association in the customer’s mind, whereby a brand can demand a premium price if they are

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perceived to be of higher quality. Brand associations are what connect the customer and the brand

and can be in the form product attributes, organizational attributes, symbols and the brand personality.

Brand loyalty may be found at the heart or core of the value of a brand. The author suggests the

greater the loyalty, the higher the brand is valued (Aaker, 1996).

In communicating its brand whether the firm’s corporate brand or product brand, the firm in essence

makes a commitment to its customers to uphold the values that it aspires to in its brand promise.

2.4.3.2 Corporate Brand ‘Brand Promise”

Knapp, (2000) asserts that the brand “promise” reflects the brand’s heart, soul and spirit as it reveals

the functional and emotional benefits that customers can expect to receive from a brand’s products and

services. Argenti and Druckenmiller (2004) add that a corporate brand provides consumers with

expectations of what the company will deliver in essence “a corporate brand promise” that can be

likened to the ‘brand promise’ of product brands. Abratt and Kleyn (2012) highlighted that if the brand

promise is consistently delivered over time, firms will derive a benefit therefrom with a strong positive

corporate reputation.

2.4.3.3 Corporate Reputation

Firestein (2006) postulate that a firm’s sustainability is informed by its reputation when it is gravely

injured; its recovery is difficult, long-term, and uncertain. Argenti and Druckenmiller (2004) further

add that although a firm has control of the definition and communication of its identity and corporate

brand, but it has less control over its image and reputation which is a consequence from public

impressions of a firm’s behaviour. The definition of corporate reputation, according to the authors,

is: “the collective representation of multiple constituencies’ images of a company built up over time

and based on a company’s identity programs, its performance and how constituencies have perceived

its behaviour”.

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2.4.3.4 Reputational Threats

Coombs (2007) refers to a crisis as “a sudden and unexpected event that threatens to disrupt an

organization’s operations and poses both a financial and a reputational threat” (p.164). The author

advises that crises may have a detrimental effect on customers, community members, employees,

suppliers and shareholders, amongst others, whether physically, emotionally and or financially.

Coombs (2007) advises that a crises’ threatens to a firm’s reputation is based on the opportunity it

provides people to think badly of the firm.

Greyser (2009) adds that what makes a crisis fundamental for a firm is based on whether the core of

the brand which he defines to “the distinctive attribute/characteristic most closely associated with the

brand’s meaning and success” (p.592) is affected. If the latter occurs, the author cautions that a firm’s

marketplace position and its brand meaning could be seriously challenged. Greyser (2009) postulates

that many observers and public relations or communications professionals believe that effective

communication can play a pivotal role in overcoming crises. He mentions that in “reputation-intensive

situations”, effective communication is commonly based on a foundation of trust in the communicating

entity by the relevant receiving publics. He goes on to states that trust in an organisation is a “product

of its performance, behaviour, and supportable communications, and is a foundation of authenticity

and reputation” (p.596). Greyser (2009) goes on to mention that an organisation’s credibility based on

its corporate behaviour and performance is fundamental to protect from reputational challenges, in

particular those not affecting on brand essence. He highlights that consumers desire quality and

reliability on a consistent basis, which point toward the importance of brands, and of corporate

reputation as signals (and guarantors).

Ghodeswar (2008) adds that when a brand is subject to aggressive competition, the personality of the

brand and the brand’s reputation assist in distinguishing it from offerings provided by competitors

along with customer loyalty. The author suggests that a brand with an identity that is strong with high

customer satisfaction rating helps in developing trust and distinguishing it from competitors. Aaker

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(2011) however cautions that in a market where competitors engage in brand preference strategies, this

may be a recipe for unsatisfactory profitability.

2.5 Conclusion The rise in consulting firms and growth in strategic management field over the past two decades is

evidence that competitive strategy and the pursuit of superior performance remains a top priority on

the executive agenda. Also with many marketing executives aspiring their brands to be market leaders

the competition remains fierce. The competitive forces approach which promotes the three generic

strategies of cost, differentiation or focus for firms to gain competitive advantage has been dominated

the field of strategy over the years with many recognising it as good sound advice, other are sceptical

about and are concerned that firms may find it difficult to follow in practice. Despite these reservations

many have continue to place excessive emphasis intense competitors in an attractive market and

perhaps ignored the capabilities approach which in contrast advocate a defensible competitive position

in the hard to imitate core competencies of the firm to gain superior performance.

In addition to identifying their strategic intent firms still need to understand how to gain a competitive

advantage over rivals. Even though market pioneering holds many advantages for the firm who wants

to “be first”, it is critical that firms understand that pioneering a product or market is not an automatic

route to permanent competitive advantage. It is a calculated risk which some may not be willing to

take especially given high initial cost associated with the feat. A more cost effective strategy for the

risk-averse firm may be a delay in the introduction of its products and to rather follow the pioneer.

Although this approach is more cost efficient and perhaps less risk to the brand compared to a failed

pioneering attempt, firms need to be watchful that a too long delay in introduction of the product may

cause consumers to label their brand as a “me too” imitator brand.

Firms who choose to use the competitive advantage strategy has an opportunity to occupy the various

positions of either market leader, challenger, follower or a specialised competitor known as a niche

player. If firms want to change their position they would engage in marketing warfare which is built on

the premise of military warfare but relates to marketing battles between competing companies,

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products and services in a very competitive environment. These “battles” is evidence that even when a

firm is dominant in the market place it must remain vigilant if they want to maintain their status. Even

though market leaders need to protect their position through defensive strategies, it is still easier to

execute than the attack strategies developed by their challenger rivals seeking to depose the leader.

Equally important is that market leaders not forget to consider the use of their core competencies such

as brand equity, and adopt the capabilities approach as an alternative to achieve superior performance

and outsmart competitors with engaging in warfare.

While the objective of the teaching case to provide students with practical understanding and

appreciation of challenges faced by market leaders in extremely competitive environments, it is

imperative that students themselves remain alert ever changes dynamics of business. Students need to

find a balance between using the theoretical frameworks to the managerial dilemmas but be adaptable

to apply strategies that reflect the changing business conditions.

The table below details the key linkages between the literature and theory and how it applies to the

teaching case and its learning objectives.

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Table 2-1: Linkages between literature, Teaching objectives and Questions

Teaching Objectives Literature Teaching questions

- Consider the factors that influence

competition amongst rival firms in

the marketplace.

- Porter (1985)

- Day &

Wensley

(2013)

- Porter (1979)

- Porter (2008)

- Porter (1996)

- Discuss the competitive landscape of the light commercial vehicle segment in South

Africa, and specifically identify the market leader, challenger, and follower and niche

positions.

- How has the positioning amongst the different competitors changed since 2000?

- Which factors influence the rivalry amongst competitors and what type of strategies

have the automakers used to gain competitive advantage over their rivals?

- What are some of the Toyota Hilux greatest competitive strengths?

- What are some of the core competencies of Toyota South Africa Motors? - Understand the concepts of

competitive strategy, competitive

advantages as well as the different

competitive positions occupied by

the market leader, market

challenger, follower and nicher in

the marketplace.

- Lieberman et

al ( 1988)

- Robinson et

al.(1994)

- Cahill (1996)

- How have they used it in the gaining a competitive advantage in the LCV segment?

Would you follow a competitive forces approach or us a capabilities approach?

- What are some of the challenges and risk associated with being a market leader? How

has Toyota dealt with these challenges?

- Is pioneering an automatic route to permanent competitive advantage?

- What is the advantage and disadvantages of being the market pioneer?

- Did pioneering so many “first” play any role in the Toyota Hilux success or did being a

second mover or fast follower allowed for a greater advantage for its competitors?

- To examine the concept of

marketing warfare and its

relevance in the contempary

- Kotler &

Singh (1981)

- Ries & Trout

- Is marketing warfare still relevant in the modern day market place?

- Evaluate the Toyota Hilux in terms of its competitors? How is it positioned?

- How has the Toyota Hilux position changed in the various sub- segments, i.e. Single

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Teaching Objectives Literature Teaching questions

business context and more

specifically the South African

automotive industry.

(1986) Cab, Double Cab, Extra Cab?

- In which sub-segment does the Hilux pick-up face the most competition and why?

- Why was the launch of the new generation Ford Ranger in 2012 so much more

successful than the Amarok introduction, a year earlier?

- Should Toyota have been more aggressive in their strategies when new generation Ford

Ranger launch in 2012, should they have chosen more counter attack then defensive

strategies?

- Would this have changed the competitive landscape in the light commercial vehicle

segment of the market, if yes, please justify your answer?

- Analyse the challenges faced by

market leaders and consider

strategies that firms can adopt to

sustain its market leadership.

- Keller &

Lehmann

(2003)

- Keller (2006)

- Aaker (2011)

- How have the Toyota Hilux managed its sustain its position as market leader?

- If you were Calvyn, what would you do next, to ensure that the Toyota Hilux pick-up

maintain its position as market leader in the in LCV segment?

- Understanding the importance of

building a brand and maintaining

it.

- Argenti, &

Druckenmiller

(2004)

- Ghodeswar

(2008)

- Hoeffler & Keller

(2003)

- What is Toyota’s core brand values and brand mantra?

- How important is the Toyota brand promise to the Hilux customers?

- Could they have handled the recall crisis in a different manner?

- What could Toyota do to protect its flagship product, the Hilux one-ton pick-up, image

in the South Africa?

- Critically analyse the brand equity of the Toyota Hilux.

- What are factors that contribute to building equity in the Toyota Hilux brand?

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3 Case methodology and Data

This research paper will take the form of a teaching case and has adopted a qualitative approach. The

intention of this teaching case is to simulate an actual business situation in the classroom context. As

explained by Harvard Business School (1998), “a case is a snapshot taken at a point in time, written to

serve a particular teaching objective”(p.1). Breslin & Buchanan (2008) adds that case studies are a

valuable device for research and teaching which focuses on the transition between theory and practice.

According to Farhoomand(2004) the case study method’s main benefit is that it’s a “question-

oriented”, and not a solution-based, approach to teaching and learning. It affords students the

opportunity to be involved in a “real-life” decision making process and helps students develop critical

thinking skills.

To understand how the Toyota Hilux has sustained its market dominance in South Africa over the past

forty-three years, the researcher conducted interviews with key employees at Toyota South Africa

Motors. The researcher also considered it important to gather data from other sources (outlined in

“Data collection Methods” below). Accordingly, information was gathered from secondary sources

such as company reports, internet websites and other articles in business press available in the public

domain.

3.1 Case Study Content Rotterdam School of Management (2012) suggest a valuable case involves: a focus and an engaging

story which is an easy-read but difficult to solve. “The clues to resolving the case issue are in the text

but hidden – it is up to students to use the tools and theories they have learned and the information

provided in the case to analyse the situation and come up with solutions”. It should challenge students

to think laterally and procure a “business case” or a certain approach by communicating how and why

they came up it (Farhoomand 2004).

Harling and Misser (1998)suggest a four-part case structure: an introduction, contextual data, the body

and a conclusion. The introduction set the scene and provide the “hook” for the case at the same time,

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identifies the protagonist and answer the questions of when and where who does what, why, and how

(Rotterdam School of Management,2012). The contextual data such as industry and organisation

background describes the environment the protagonist operates while the decision situation is

developed in the part of the case. The conclusion synthesis the information and reiterate the decision

maker’s options in the case (Farhoomand, 2004).

3.2 Case Subject Selection Since a case is based on a real life business situation, case leads may arise from various sources such

as the business press and if followed regularly may bring about case subject opportunities(Corey,

1998). The Toyota and Hilux brands are well cited in the business press, especially given Toyota 36-

year market leadership in South Africa automobile market. Furthermore, since the researcher is an

employee of Toyota South Africa Motors, it was easy to establish a lead and contact with the key

employees in the organisation.

In addition, Toyota Hilux bakkie brand was chosen based on its relevance and having regard to the

teaching objectives identified. These objectives are as follows:

Analyse the factors that influence competition amongst rival firms in the marketplace.

Understand the concepts of competitive strategy, competitive advantages as well as the

different competitive positions occupied by the market leader, market challenger, follower and

niche in the marketplace.

To examine the concept of marketing warfare and its relevance in the contempary business

context and more specifically the South African automotive industry.

Analyse the challenges faced by market leaders and consider strategies that firms can adopt to

sustain its market leadership

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3.3 Research design The case study will take the form of a teaching case. Harling and Misser (1998) describes case writing

as a process with a series of four phases within certain rules and guidelines for each.

The first phase is the preliminary stage in which the research decides to write a case, getting leads or

establish contact with the prospective organisation. In the second phase, referred to as the pre-writing

stage the researcher conducts investigates the case thoroughly through the collecting, organizing and

analysing of data. Phase three relates to the actual writing of the case along with a teaching note. The

fourth and final phase is the wrapping up stage in which the researcher requested permission from the

participating organisation to release the case, testing the teaching case in a real life classroom context

and where recommended making the necessary revisions to the case and teaching note.

The researcher, being an employee of the participating organisation, obtained permission from Toyota

South Africa Motors by means of a presentation to Sales and Marketing executive team with regard to

writing a case on the Toyota Hilux bakkie sustained market leadership. The presentation and meetings

were held on the 13 and 14 July 2016 respectively. Both the Senior Vice President: Sales and

Marketing and the General Manager: Corporate Affairs reviewed the final written case study before

submission on 07 December 2016. Upon receiving permission to proceed, the researcher began to

collect data primarily through qualitative interviews with key employees of Toyota South Africa

Motors. The interviews were recorded and then transcribed. The researcher then proceeded to write the

case and the accompanying teaching note.

3.4 Data Sources and Collection The research data in this teaching cases was drawn from four of the six sources of evidence suggested

by Yin (1994)which are documents, archival records, interviews and direct observations. Data

collection will be mainly in the form data provided by the participating organisation as well as semi-

structured interviews with leaders at decision making levels and employees at operational levels. The

researcher will also consider secondary data such as business press, internet websites, automotive

industry material, available in the public domain.

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3.4.1 Interviews The researcher conducted interviews with the following key members of the Toyota South Africa

Motors sales and marketing management team during the period of 23 September 2016 to 18

November 2016 at their offices in Johannesburg, South Africa.

1. Senior Vice President: Sales and marketing

2. Vice President: Sales & Dealer

3. General Manager: Marketing Communication

4. General Manager: Marketing Planning

5. Vice President: Hino, previously held the position of GM: Sales & Dealer

6. Senior Manager: Dealer sales

7. Senior Manager: Sales Support

8. Manager: Customer Services previously held the position of Manager: Dealer Sales To supplement the company information, the researcher conducted interviews with four customers of

the three leading brands in the light commercial vehicle segment which include: Toyota Hilux, Ford

Ranger and the Nissan Navara in order to obtain a better understanding from different customers’

perspective. These interviews were conducted during the period of 10 October 2016 and 18 October

2016.

The researcher applied a semi structured interview method where each interview began with a

predetermined interview schedule; however, deviations were permitted when it flowed naturally in the

conversation. This allowed each interviewee the freedom to express themselves while still ensuring

that the researcher maintained control over the interview process. The interviews were based on

themes from the literature review along with data collected from secondary sources such as press,

internet websites, automotive industry material which informed the case themes. The interviews

primarily focused on identifying the challenges faced by the Toyota Hilux brand in South Africa in

sustaining its market dominance over the last forty-three years and specific focus on the last decade. In

addition, the researcher also sought to understand the complexities of competitive strategy and market

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warfare in the South Africa vehicle market the various strategies the team adopted to the address these

challenges along with the role brands play in sustaining market leadership.

3.4.2 Recording devices Data were captured through note-taking and tape recording. Quotations have been used in some

instances to bring the case study to life and also to help students to relate to the characters in the case

study. Data were also obtained from various internal co