Discover a comprehensive Case Study of SWOT analysis of Toyota’s marketing strategy as it adapts to the modern automotive landscape. Explore the strengths, weaknesses, opportunities, and threats facing the company, alongside strategies for leveraging technology and innovation in a competitive market. Dive into insights about Toyota’s approach to emerging markets, consumer preferences, and operational challenges.
SWOT Analysis of Toyota’s Marketing Strategy: A Case Study
This document presents a SWOT Analysis of Toyota’s marketing strategy as the company moves into the second quarter of the 21st Century.
Strengths
- Strong brand image
- Progressive technology
- Worldwide supply chain
- Rapid innovation abilities
- Strong emphasis on research and development
Toyota is highly favored by consumers because it offers a combination of product excellence and lower ownership costs compared to competitors. In technology, Toyota aims to be at the forefront of the “future of mobility” by driving design and purpose. The company achieves this by expanding markets, forming new partnerships, and creating purposeful products.
Another key strength is Toyota’s focus on its supply chain. Where it employs technology and new process approaches to efficiently recover global supply operations from natural disasters. Toyota is also a stable company with significant rapid innovation capabilities, utilizing expanded markets for car-sharing, new partnerships to drive innovation, and product changes like vehicles with Hybrid Synergy Drive Technology.
Furthermore, research and development is a distinct strength, with Toyota emphasizing basic research, forward-looking and leading-edge development, specifically in technology and product development. These efforts establish systems that transform essential components.
Weaknesses
- Organisational structure
- Organisational culture
- Product recalls in recent years
- Dependency on suppliers
Toyota has experienced problems with its organisational structure. According to former employees, crucial decision-making by executives in Japan caused safety issues in vehicles and led to negative media coverage. Additional organisational structure problems stemmed from expansion strategies in the United States. Which focused on increasing assembly plants while simultaneously cutting costs and dealing with the complexity of vehicle microchip technology.
These structural issues also contributed to a poor organisational culture and subsequent safety recalls that damaged the brand. One past safety recall involved 2.3 million vehicles with accelerator pedal issues. Which ultimately highlighted a dependency on external suppliers for components not manufactured in Toyota’s own factories.
Opportunities
- Developing markets in emerging countries
- Growing demand for fuel-efficient vehicles
- Growing interest in advanced electronics in vehicles
- Mounting concern for eco-friendly solutions
Emerging markets like China, India, and Brazil have exceeded market expectations. China has demonstrated innovation in digital marketing, India is concentrating on electric or two-wheeled vehicles, and Brazil has successfully balanced cost-to-value trade-offs for positive profit margins.
The Vehicle Electrification Market is projected to grow by 9.1%, reaching $142.1 billion by 2027, up from $71 billion in 2019. This trend is driven by demands for improved fuel economy, low maintenance costs, and enhanced performance. Current vehicles are shifting from conventional to advanced technology to compete and meet consumer demand for improved vehicle efficiency and eco-friendly solutions.
Threats
- Increasing market presence of low-cost competitors
- Rapid innovation of challengers
- Highly appraised raw materials
- Tariffs and trade
- Lesser profits
Competition in the auto industry is escalating due to rapid innovation, with combinations of performance and cost rapidly entering the market. Innovation has intensified the focus on electric vehicles that are budget-friendly and globally green. Government support combined with increasing consumer interest in sustainability is a decisive factor in the growth of the electric vehicle market.
High raw material prices are a significant concern for the auto industry. In August 2017, natural materials in North America averaged around $2,000 per vehicle, an approximate increase of $221 from the previous year. As Toyota relies on suppliers for bulk raw materials, it is affected by the fluctuating costs of steel, aluminum, and plastic resin.
Major threats also include tariffs and trade issues, as raw material costs rise and higher tariffs regulate the importation and exportation of goods. For example, Ford reported a $1 billion profit during the second quarter of 2018, a 50 percent drop from the previous year, attributed to reduced sales in China and the effects of the Trump administration’s tariffs.
Conclusion and Strategy for Toyota Marketing SWOT Analysis
To address external market opportunities and competitive threats, Toyota should leverage its strengths in advanced technology and innovation. Key external factors include the demand for fuel-efficient vehicles, interest in advanced vehicle electronics, concern for eco-friendly solutions, and the rising presence and rapid innovation of low-cost competitors.
An internal opportunity for Toyota is to refine its organisational structure and culture to establish a more robust planning and decision-making matrix. This could help prevent safety-related recalls. Strategically, Toyota should capitalise on its competitive advantages in advanced technology and rapid innovation.
Strategy
The company should pursue an aggressive strategic focus as it possesses many internal strengths and has numerous external opportunities to exploit. This approach can differentiate the company, leveraging its brand image known for providing quality performance and affordability.
Conversely, concerning the improved organisational structure and culture, a defensive approach is advisable. This is necessary because internal weaknesses have allowed external threats to gain market presence through issues like recalls and negative publicity. Past problems with the organisational structure led to severe liabilities from negative press due to safety recalls and inadequate supply chains that hindered growth efforts. A defensive strategy in this area can mitigate future negative publicity and support the company’s long-term success.
Core Competency
A core competency is defined as the ideology that allows a company to distinguish itself from competitors in its market. Historically, core competencies focused on consumer benefits, were difficult for competitors to imitate, and applicable across multiple products and markets. Core competencies have since evolved to include quality, customer service, value, innovation, and marketing as companies seek a competitive advantage.
Operational Excellence: Amazon
Amazon exemplifies operational excellence through powerful software that enables global purchasing and efficient delivery, with some Amazon Prime products arriving in under 24 hours. Amazon utilizes algorithms to personalize shopper experiences, a process that competitors have struggled to match for reliability.
Product Leadership: Apple
Apple demonstrates product leadership through three key management policies: maintaining a single profit and loss statement, operating with a small product line, and developing products in unconventional ways. The small product line ensures concentrated effort and resources are focused on perfecting a few products rather than spreading resources thin across many.
Developing products unconventionally involves bringing diverse groups together to create multiple customer experiences—including hardware, software, interfaces, online experience, and packaging—all overseen by a single person for the best possible outcome.
Customer Intimacy: Johnson & Johnson
Johnson & Johnson focuses on customer intimacy by employing specialists who work directly with consumers and developing a diverse and global supply base. The company’s strategy involves partnering with global suppliers who reflect the diversity of its patients and customers. Since the start of its Supplier Diversity Program in 1998, Johnson & Johnson has invested over a billion dollars annually. This program helps the company discover customer needs and foster customer relationship mindsets to build a diverse, customer-intimate market.
Boston Consultant Matrix – Walmart
The Boston Consulting Group (BCG) Matrix is a framework used for nearly 50 years to analyze products based on market growth and market share, helping businesses identify opportunities for market share growth. The matrix requires data on market share and growth rate and segments products or services into four quadrants: Stars, Cash Cows, Dogs, and Question Marks.
- Stars are products with the best market share and highest profits.
- Cash Cows are business units or products with high market value but low growth prospects.
- Dogs are units or products with low market share and a flat growth rate.
- Question Marks have high growth prospects but low market shares.
Segmentation
The BCG Matrix is useful for understanding Walmart’s segmentation strategies.
- Stars: Walmart Supercenters are the stars of their segmentation, possessing high market growth and market share, serving as the backbone of the Walmart domain with 3,302 out of 4,711 total stores in the United States.
- Question Marks: The Walmart Neighborhood Market and the Walmart Fuel Store are considered Question Marks due to high market value but low market share relative to the market population. Neighborhood Markets, primarily grocery stores with household and health supplies, are successful and currently represent the second largest U.S. market segment with 704 stores.
- Fuel Store: The Walmart Fuel Store is also a Question Mark as a new opportunity. It is a 4,000-square-foot convenience store offering more than just coffee, snacks, or fuel. Its status as a Question Mark is due to its newness and lack of established growth. If sales and market perspective improve, this segment has the potential to become a Cash Cow.
- Dogs: The Walmart Express segment, a smaller grocery-focused version of Walmart, is a Dog. It has experienced sales declines since 2016 and is no longer being expanded or invested.
Strengthening
Current attention is focused on strengthening the Supercenters and Neighborhood Markets. As of 2018, Walmart Express has only two locations out of 4,711 U.S. Walmart stores.
This model is vital for marketers as it provides insights into products’ internal strengths and weaknesses. Enabling strategies that capitalize on market share growth opportunities. As shown by Walmart’s focus on in-depth analysis of its product value via market shares and market value.
Product Life Cycle Model – Apple
The Product Life Cycle (PLC) Model analyzes product sales and provides insights into the maturity stage of products and industries. The model helps predict future sales growth and informs appropriate strategies. The PLC Model consists of four stages: introduction, growth, maturity, and decline. Key considerations at each stage include product development, pricing, distribution, and promotion.
- Introduction Stage: The primary goal is to establish a market and drive consumer demand.
- Growth Stage: The focus is on building brand loyalty and increasing market share.
- Maturity Stage: The main concern is defending market share and maximizing profits.
- Decline Stage: The model suggests encouraging progression, reforming, or replacing the product.
Apple Products by Stage:
- Introduction Stage: Products include the HomePod, MacPro, AppleCard, and Apple Arcade. Apple Arcade, a new game subscription service, aims to provide development for new games playable across Apple platforms.
- Growth Stage: Newer products gaining market value and shares, such as AirPods, Apple Watch, Apple TV+, and Apple News+.
AirPods
Apple AirPods are the second best-selling Apple product. Launched two years ago, they fit the Growth Stage perfectly, evidenced by a 500% increase in Google search ratings between December 2016 and December 2017.
- Maturity Stage: Staple products with a history in the product line, including the iPhone, iPad, MacBook, and iMac. The iPhone X is the newest staple in the iPhone line. However, a decline in the smartphone industry has caused Apple’s iPhone sales to drop by approximately 30% in the first quarter of 2019. If market value and shares do not improve, the iPhone may require replacement or redesign.
- Decline Stage: Products that have been discontinued, like Time Capsule, Xserve, and iPad Photo. The iPod Touch, while surviving multiple discounted stages, would benefit from a redesign, serving as a product extension in the decline stage. Sources indicate a new iPod Touch is in the works, aiming to resemble the iPhone X models.
This model is significant for marketers as it provides essential insights into a product’s stage. Which dictates the appropriate marketing strategies (e.g., introduction stage marketing differs vastly from maturity stage marketing). Marketers can utilize the PLC Model to evaluate external threats and opportunities in their market segment to align the company’s strategic focus for optimal outcomes.