MARKETING MANAGEMENT“TOYOTA”

KELOMPOK 7 – MM EKSEKUTIF B 27CDIAN ATIKA

RAFIKARERY INDRA KUSUMA

ContentCase Summary

Main Issue

Problem Statement

Analysis

Recommendation

• On August 28, 2009, driver and four passengers of Lexus ES350 were killed because the car couldn’t stop horrified audiences in the United States and around the world.

• For Japan-based Toyota Motor Corporation, a company once revered for its commitment to quality and reliability, this incident touched off a series of recall announcements.

• Toyota have to lived up to the high standards and improving reputation after incident.

Case summary

Year History

1937 Toyota was founded by Toyoda Family

1938 Production began

1947 Toyota had produced 100,000 cars

1950 • Improvement Toyota system lead to JIT manufacturing• Toyota adopted a system known as jidoka• Ohno and Toyota sought to instill innovation and the idea of continousimprovement (“kaizen”) on the factory floor

1951 Introduction of a “Creative Idea Suggestion” system, a form that anyone at a plant could fill out with a suggestion for how to make processes and production better.

Culture Stressed quality, Safety, Duty, Family atmosphere, Creativity

Year Toyota in the U.S

1957 Introduced Toyota Crown The first Japanese passenger car exported to the U.S

1958 Sales amounted to 287 Crown Sedans and one Land Cruiser

A four wheel drive SUV

1961 Land Cruiser was the sole Toyota export to the U.S

1965 Developed and built the larger and powerful Corona

1967 President Tatsuro Toyoda had a stroke.

Management passed out the founding family’s hands for the first time.

1968 Built Corolla An affordable but technologically advanced Sedan.

1969-1970 • The Corona, Corolla, Land Cruiser garnered a reputation for quality and reliability.• Marketing push in The U.S.

Year Toyota in the U.S

1972 Sold one million vehicles just in The U.S

1974 Improving reputation, consumer concern for fuel economy

1978 Both cars and trucks made the firm the number one import brand in sales

1980 Toyota held an 8% unit share of new cars sold in The U.S.

Toyota increased its capital investment by 50% in order to boost production.

1983 Compete with German brands

1989 Toyota broke into the crowded luxury vehicle market by unveiling the Lexus.

Lexus sold 20,000 units.

1980s-1990s

Toyota defined its growth as “jojo”, slow and steady.

Global market share of new car unit sales from 3% in 1980, 8% in 1990, and in 9% in 2000.

Name History Strategy

Hiroshi Okuda Replaced Toyoda in 1995. Okuda step down as Chairman in June 2006.

Focused on establishing factories in new country markets and set aggressive global resource allocation and profitability targets.

KatsuakiWatanabe

Become president in 2005.

“Kakushin” meaning revolutionary change or radical innovation. He announced new cost reductions via a program called “Value Innovation”.

Akio Toyoda Become president (youngest CEO) in June 2009

A resolve to make a big turn from emphasizing volume to quality. Rectify small errors, one after another. We may stretched more than we should have, and that made us unable to capitalize on Toyota’s traditional strengths.

• Before incident:

Since Toyota was founded, profitability, global presence and production in the U.S. increased dramatically until an incident happened on August 28, 2009 around San Diego highway.

• After incident:

Toyota President Akio Toyoda apologize to the public.

• First recall :

Recall was met with disbelief but continuing support for the brand, subsequent revelations and recalls tested the brand’s resilience in the U.S.

Main Issue

3. Prius recallRecall 437,000 Prius and other Toyota hybrid vehicles for brake

failure. Vehicles were susceptible to a momentary loss in braking capability while travelling on uneven surfaces.

Toyota recalled an additional 2.3 million vehicles on January 21, 2010.

2. Sticky pedal recallThe apparent manufacturing flaw caused the pedal to be hard to

depress and slow to return to resting position.

Starting September 2009 – January 2010, news of Toyota recalls flooded American media. These recalls fell into three distinct categories:

1. Pedal entrapment recall

NHTSA open an investigation into the Lexus ES350 after fielding consumer complaints about pedal entrapment.

Recalls Begin

Recall

• How to return Toyota to producing high-quality products on a zero-defect basis.

• How to convince Congress and the public of Toyotas sincere commitment to this cause.

• Most consumers choose the Toyota brand because of its reputation, but where does this prolonged and misunderstood problem leave the company’s reputation?

Problem Statement

Toyota Models Recalled: 2009-2010

Years Floor Mat Entrapment

Sticky Pedals Braking Lexus

2004-2009 Prius

2005-2010 Avalon, Tacoma

Avalon, Prius, Highlander

2006-2010 IS 250, IS 350

2007-2010 Tundra Tundra Camry ES 350

2008-2010 Highlander Sequoia

2009-2010 Corolla, Venza, Matrix

Matrix, RAV4, Corolla

Toyota Pedal Assembly

Effect of Recall

Year Sales in the US Shares

Januari 2010 Fell 16% Lost 11.6%

Februari 2010 Fell 8.7% Lost 11.6%

Analysis• Slow response

In a global corporation with thousands of suppliers, identifying the problem and getting all the players alligned took more time. • Saving face

Toyota issued a public apology, explanation about repairing vehicles, recalls information and interview in public relations and social media.• Japanese views

Japan’s media argued that the recalld and critismof Toyota were a consequence of Toyota’s poor management.

Business Impact• Competitor jumped on the opportunity, offering deals and steal

away Toyota’s customers.

• Toyota estimates that it was losing approximately 20,000 sales per week.

• Some dealers reported year-on-year sales declines of 25%.

• The Camry, Highlander and RAV4 experienced immediate and massive price drops on dealer lots right after the January recalls.

• Out of pocket costs of fixing the recalled cars, lost sales, market share, pricing power and residual values figured in the company’s valuation and recalls affected them all.

• Japanese media argue that Toyota’s poor crisis management might damage the credibility of Japanese manufacturing in general.

Recommendation

• Toyota have to learn that its initial slow response was the reason why the recall issue had become an increasing problem, Akio Toyoda should have announced that he would attend the hearing much earlier.

• Toyoda focused on protecting its brand and image with accepted a formal invitation to testify before cooperate with the U.S. Congress.

• While Toyoda’s February 24 testimony would aim to show that the company sincerely wished to make things right and renew its commitment to quality.

• Toyota organize a clear message around its commitment to return to quality.

• A “comprehensive” response included taking care of vehicles on the road today and making them “even safer” in the future and being “more open and transparent” about safety issues that might arise.

• Toyota would set a new standard for transparency and speed of response on safety issues and would continue to advance safety and environmental technologies.

Recommendation

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