INTRODUCTION

Replica of the Toyota Model AA, the first production model of Toyota
in 1936

Customer satisfaction
Organizations are increasingly interested in retaining existing customers while targeting
non-customers; measuring customer satisfaction provides an indication of how
successful the organization is at providing products and/or services to the marketplace.

Customer satisfaction is an ambiguous and abstract concept and the actual manifestation
of the state of satisfaction will vary from person to person and product/service to
product/service. The state of satisfaction depends on a number of both psychological and
physical variables which correlate with satisfaction behaviors such as return and
recommend rate. The level of satisfaction can also vary depending on other options the
customer may have and other products against which the customer can compare the
organization's products.

Because satisfaction is basically a psychological state, care should be taken in the effort
of quantitative measurement, although a large quantity of research in this area has
recently been developed. Work done by Berry, Brodeur between 1990 and 1998 defined
ten 'Quality Values' which influence satisfaction behavior, further expanded by Berry in
2002 and known as the ten domains of satisfaction. These ten domains of satisfaction
include: Quality, Value, Timeliness, Efficiency, Ease of Access, Environment, Inter-
departmental Teamwork, Front line Service Behaviors, Commitment to the Customer and
Innovation. These factors are emphasized for continuous improvement and organizational
change measurement and are most often utilized to develop the architecture for
satisfaction measurement as an integrated model. Work done by Parasuraman, Zeithaml
and Berry between 1985 and 1988 provides the basis for the measurement of customer
satisfaction with a service by using the gap between the customer's expectation of
performance and their perceived experience of performance. This provides the measurer

with a satisfaction "gap" which is objective and quantitative in nature. Work done by
Cronin and Taylor propose the "confirmation/disconfirmation" theory of combining the
"gap" described by Parasuraman, Zeithaml and Berry as two different measures
(perception and expectation of performance) into a single measurement of performance
according to expectation. According to Garbrand, customer satisfaction equals perception
of performance divided by expectation of performance.

The usual measures of customer satisfaction involve a survey with a set of statements
using a Likert Technique or scale. The customer is asked to evaluate each statement and
in term of their perception and expectation of the performance of the organisation being
measured.

In a competitive marketplace where businesses compete for customers, customer

satisfaction is seen as a key differentiator and increasingly has become a key element of
business strategy.

“Customer satisfaction, a business term, is a measure of how products and services

supplied by a company meet or surpass customer expectation. It is seen as a key
performance indicator within business and is part of the four perspectives of a Balanced
Scorecard.”

Customer Satisfaction in 7 Steps

It's a well known fact that no business can exist without customers. In the business of
Website design, it's important to work closely with your customers to make sure the site
or system you create for them is as close to their requirements as you can manage.
Because it's critical that you form a close working relationship with your client,
customer service is of vital importance. What follows are a selection of tips that will
make your clients feel valued, wanted and loved.

1. Encourage Face-to-Face Dealings

This is the most daunting and downright scary part of interacting with a customer. If
you're not used to this sort of thing it can be a pretty nerve-wracking experience. Rest
assured, though, it does get easier over time. It's important to meet your customers face
to face at least once or even twice during the course of a project.
My experience has shown that a client finds it easier to relate to and work with someone
they've actually met in person, rather than a voice on the phone or someone typing into
an email or messenger program. When you do meet them, be calm, confident and above
all, take time to ask them what they need. I believe that if a potential client spends over
half the meeting doing the talking, you're well on your way to a sale.

2. Respond to Messages Promptly & Keep Your Clients Informed

This goes without saying really. We all know how annoying it is to wait days for a
response to an email or phone call. It might not always be practical to deal with all
customers' queries within the space of a few hours, but at least email or call them back
and let them know you've received their message and you'll contact them about it as
soon as possible. Even if you're not able to solve a problem right away, let the customer
know you're working on it.

A good example of this is my Web host. They've had some trouble with server
hardware which has caused a fair bit of downtime lately. At every step along the way I
was emailed and told exactly what was going on, why things were going wrong, and
how long it would be before they were working again. They also apologised repeatedly,
which was nice. Now if they server had just gone down with no explanation I think I'd
have been pretty annoyed and may have moved my business elsewhere. But because
they took time to keep me informed, it didn't seem so bad, and I at least knew they were
doing something about the problems. That to me is a prime example of customer
service.

3. Be Friendly and Approachable

A fellow SitePointer once told me that you can hear a smile through the phone. This is
very true. It's very important to be friendly, courteous and to make your clients feel like
you're their friend and you're there to help them out. There will be times when you want
to beat your clients over the head repeatedly with a blunt object - it happens to all of us.
It's vital that you keep a clear head, respond to your clients' wishes as best you can, and
at all times remain polite and courteous.

4. Have a Clearly-Defined Customer Service Policy

This may not be too important when you're just starting out, but a clearly defined
customer service policy is going to save you a lot of time and effort in the long run. If a
customer has a problem, what should they do? If the first option doesn't work, then
what? Should they contact different people for billing and technical enquiries? If they're
not satisfied with any aspect of your customer service, who should they tell?
There's nothing more annoying for a client than being passed from person to person, or
not knowing who to turn to. So make sure your customer service policy is present on
your site -- and anywhere else it may be useful.

5. Attention to Detail (also known as 'The Little Niceties')

Have you ever received a Happy Birthday email or card from a company you were a
client of? Have you ever had a personalised sign-up confirmation email for a service
that you could tell was typed from scratch? These little niceties can be time consuming
and aren't always cost effective, but remember to do them.

Even if it's as small as sending a Happy Holidays email to all your customers, it's
something. It shows you care; it shows there are real people on the other end of that
screen or telephone; and most importantly, it makes the customer feel welcomed,
wanted and valued.

6. Anticipate Your Client's Needs & Go Out Of Your Way to Help Them
Out

Sometimes this is easier said than done! However, achieving this supreme level of
understanding with your clients will do wonders for your working relationship.

Take this as an example: you're working on the front-end for your client's exciting new
ecommerce endeavour. You have all the images, originals and files backed up on your
desktop computer and the site is going really well. During a meeting with your client
he/she happens to mention a hard-copy brochure their internal marketing people are
developing. As if by magic, a couple of weeks later a CD-ROM arrives on their
doorstep complete with high resolution versions of all the images you've used on the
site. A note accompanies it which reads:

"Hi, you mentioned a hard-copy brochure you were working on and I wanted to
provide you with large-scale copies of the graphics I've used on the site. Hopefully
you'll be able to make use of some in your brochure."

Your client is heartily impressed, and remarks to his colleagues and friends how very
helpful and considerate his Web designers are. Meanwhile, in your office, you lay back
in your chair drinking your 7th cup of coffee that morning, safe in the knowledge this
happy customer will send several referrals your way.

7. Honour Your Promises

 It's possible this is the most important point in this article. The simple message: when
you promise something, deliver. The most common example here is project delivery
dates.

Clients don't like to be disappointed. Sometimes, something may not get done, or you
might miss a deadline through no fault of your own. Projects can be late, technology
can fail and sub-contractors don't always deliver on time. In this case a quick apology
and assurance it'll be ready ASAP wouldn't go amiss.

Conclusion
Customer service, like any aspect of business, is a practiced art that takes time and
effort to master. All you need to do to achieve this is to stop and switch roles with the
customer. What would you want from your business if you were the client? How would
you want to be treated? Treat your customers like your friends and they'll always come
back

Employee Satisfaction + Customer Satisfaction = Sustained Profitability

“When companies put employees and customers first, their employees

are satisfied, their customers are loyal, their profits increase, and their
continued success is sustained.” This is the conclusion of a recent
Harvard Business Review article, “Putting the Service-Profit Chain to
Work” by James L. Heskett, Thomas O. Jones, Gary W. Loveman, W.
Earl Sasser, Jr. and Leonard A. Schlesinger, members of the Harvard
Business School faculty and service-management interest group. While
there are a number of studies which link customer satisfaction with
profit, there are few studies which add employee satisfaction into the
profit formula. Digital became interested in this connection in 1994.
Based on this interest, an internal study of customer satisfaction,
employee

satisfaction and operating measures was conducted. The purpose of

this article is to support the assertion of the customer satisfaction and
employee satisfaction connection and to illustrate Digital’s approach
towards acting on this connection.
When describing the service profit chain, the authors discuss the
experience and success of companies that include Banc One, Intuit
Corporation, Southwest Airlines, Service Master, USAA, Taco Bell, and
MCI. They stress that the correlation of putting employees and
customers first with profits has necessitated new ways of managing
and measuring success. The techniques used, focus on the impact of
employee satisfaction, loyalty, and productivity on “the value of
products and services delivered so that managers can build customer
satisfaction, loyalty and assess the corresponding impact on
profitability and growth.” The authors note, “...the lifetime value of a
loyal customer can be astronomical, especially when referrals are
added to the economics of customer retention and repeat purchases of
related products.” The tool used to examine the relationship between
service and profit is called the Service-Profit Chain.

The Service-Profit Chain

“The service-profit chain establishes relationships between
profitability, customer loyalty and employee satisfaction, loyalty and
productivity. The links in the chain are as follows:
• Profit and growth are stimulated primarily by customer loyalty.
• Loyalty is a direct result of customer satisfaction.
• Satisfaction is largely influenced by the value of services provided to
customers.
• Value is created by satisfied, loyal and productive employees.
• Employee satisfaction, in turn, results primarily from high-quality
support
services and policies that enable employees to deliver results to
customers.”

Building Commitment through Employee and

Customer Engagement Practices

Dr. David Ulrich in his article, “Tie the Corporate Knot: Gaining
Complete Customer Commitment,” makes a strong point of connecting
customer satisfaction and employee satisfaction. “Psychologists have
identified two major principles that help determine how individuals
develop commitment: information and behavior. When individuals
have access to extensive, understandable, and credible information,
they engage in activities consistent with the information. For example,
when we hear from many people whose opinions we value that a
restaurant offers good food or services, we are more likely to act on
the information and visit the restaurant. Providing credible information
is a first principle of creating commitment. Information does not
sustain commitment without the second principle, behavior.

Complete customer commitment flows from the same two principles of

information and behavior. When customers receive more information
about the firm, they are more apt to take action that demonstrates
commitment to the firm. Customer commitment may develop at two
tiers: strategic and organizational. The strategic tier includes products
and services. The organizational tier includes firm practices that
translate strategies into action. Partial customer commitment focuses
exclusively on the strategic tier, where firms build commitment by
sharing information about how products have been adapted to meet
customer criteria and by encouraging customer is to participate in the
design and delivery of products. Creating unity with customers through
human resource practices ensures complete customer commitment
because customers receive information and participation not only on
strategic activities, but on organizational ones as well.”

“Market-In and Product-Out Measures”

It was used as part of the Product Quality Taskforce report issued in

1994 within Digital Equipment Corporation. It reflects the relationship
of the “Market-In” versus “Product-Out” measures. The concept of
Market-In rather than Product-Out is the basis of one of the four
revolutions in management thinking taught by the Center for Quality of
Management. William Davidow from Total Customer Service: The
Ultimate Weapon., writes, “Effective measurement... can’t take the
place of having a solid core product or service to begin with, nor is it a
substitute for strategy...but...lacking good measures, no company can
assess its progress or adjust to changes in customer expectations”.
Market-In and Product-Out Measures
REVIEW OF LITERATURE
Replica of the Toyota Model AA, the first production model of Toyota in 1936

The story of Toyota Motor Corporation began in September 1933 when Toyoda
Automatic Loom created a new division devoted to the production of automobiles under
the direction of the founder's son, Kiichiro Toyoda. Soon thereafter, the division
produced its first Type A Engine in 1934, which was used in the first Model A1
passenger car in May 1935 and the G1 truck in August 1935. Production of the Model
AA passenger car started in 1936.

Although the Toyota Group is most well known today for its cars, it is still in the textile
business and still makes automatic looms (fully computerized, of course), and electric
sewing machines which are available worldwide.

Toyota Motor Co. was established as an independent company in 1937. Although the
founding family name is Toyoda, the company name was changed to:

• Signify the separation of the founders' work life from home life;
• Simplify the pronunciation, and
• Give the company an auspicious beginning. Toyota is considered luckier than
Toyoda in Japan, where eight is regarded as a lucky number, and eight is the
number of strokes it takes to write Toyota in Katakana.

During the Pacific War the company was dedicated to truck production for the Imperial
Army. Because of severe shortages in Japan, military trucks were kept as simple as
possible. For example, the trucks had only one headlight on the center of the hood.

Fortunately for Toyota, the war ended shortly before a scheduled allied bombing run on
the Toyota factories in Aichi.

Commercial passenger car production started in 1947 with the model SA. In 1950 a
separate sales company Toyota Motor Sales Co. was established (which lasted until July
1982). In April 1956 the Toyopet dealer chain was established.
Above diagram show the financial comparison of top vs. bottom customer
satisfaction
 COMPANY PROFILE

The Headquarters of Toyota in Toyota City, Japan

ASSEMBLY PLANTS OVER THE WORLD
Toyota has factories all over the world, manufacturing or assembling vehicles for local
markets, including its most popular model, the Corolla. Toyota has manufacturing or
assembly plants in the United States, Australia, Canada, Indonesia, Poland, South Africa,
Turkey, the United Kingdom, France, Brazil, and more recently India, Argentina and
Czech Republic. Toyota also builds and sells cars in China in a joint venture with Tianjin
Xiali. Toyota New Zealand assembled vehicles until 1998, when it switched to importing
cars from Japan and Australia. Cars from these plants are often exported to other
countries.

Board of directors

Chairman and Representative Director Fujio Cho

Vice Chairman and Representative Katsuhiro Nakagawa
Director
President and Representative Director Katsuaki Watanabe
Executive Vice President and Tokuichi Uranishi
Representative Director
Kazuo Okamoto
Kyoji Sasazu

Mitsuo Kinoshita

Takeshi Uchiyamada
Masatami Takimoto
Akio Toyoda
Senior Managing Director Yukitoshi Funo
Takeshi Suzuki
Atsushi Niimi
Hiroshi Takada
 Teiji Tachibana
Shinichi Sasaki
Akira Okabe
Yoichiro Ichimaru
Shoji Ikawa
Koichi Ina
Takeshi Yoshida
Shinzo Kobuki
Akira Sasaki
Hiroshi Kawakami
Tadashi Arashima
Mamoru Furuhashi
Satoshi Ozawa

Honorary Chairman Shoichiro Toyoda

Senior Advisor Hiroshi Okuda

DETAIL STUDY OF TOYOTA

In 2006, Toyota was engaged in a variety of projects designed to solidify its foundations
while continuing to grow.On the product front, Lexus launched its new flagship model,
the LS, and the new global Camry went on sale. In Japan, a new Corolla range was
introduced, emphasizing the importance of this best-selling car.In manufacturing, several
new projects were started around the world. In May, manufacture of the Camry began in
Guangzhou, China, while in the United States, the Kentucky plant, which in October
celebrated 20 years of production, started manufacturing the first Toyota hybrid vehicle
to be made in North America, the Camry Hybrid. In November, the Texas plant began
producing the new Tundra truck, a key vehicle in Toyota’s North American lineup. In
Japan, Toyota Motor Kyushu, Inc. began full-scale operations at its engine factory, while
Toyota Motor Tohoku Co., Ltd. increased its manufacturing capacity.

In human resources development, following the establishment of the Asia Pacific Global
Production Center in Thailand in August 2005, Toyota established the North American
Production Center in the U.S. in February, and the European Global Production Center in
the United Kingdom in March. Established as branches of the Global Production Center
in Japan, these were created to spread Toyota’s manufacturing knowledge and skills
throughout the world in pace with the rapid growth of Toyota’s overseas manufacturing.
The centers educate trainers for local manufacturing plants in all regions, with trainees
passing on what they learn to team members on their return to their plants.
In R&D, Toyota focused its efforts on three key areas: environment, safety and energy. It
made a special effort in the area of the environment by expanding its lineup of hybrid
vehicles, and has worked on R&D relating to plug-in hybrid. In addition, as part of
Toyota’s efforts to respond to the diversification of energy, in 2007 Toyota plans to
introduce a flex fuel vehicle* in the Brazilian market that will run on 100% bio-ethanol
fuel. From this point on, based on the philosophy of providing “the right car, in the right
place, at the right time,” and in accordance with the infrastructure and customer needs of
each region, Toyota will continue to promote efforts to develop environmentally friendly
technology and vehicles.

Corporate Data
 Company Name Toyota Motor Corporation

Head Office 1 Toyota-Cho, Toyota City, Aichi Prefecture 471-8571,

Japan
Phone: (0565)28-2121

Tokyo Head Office 1-4-18 Koraku, Bunkyo-ku, Tokyo 112-8701, Japan

Phone: (03)3817-7111

Nagoya Office 4-7-1 Meieki, Nakamura-ku, Nagoya City, Aichi Prefecture

450-8711, Japan
Phone: (052)552-2111

Establishment August 28, 1937

Since its foundation, Toyota has conducted business with “contributing to the
development of a prosperous society through the manufacture of automobiles” as a
guiding principle. When I became president two years ago, I called on all employees to
work with me in returning to our origins and asking earnestly whether Toyota is truly
contributing to society and whether we are doing everything we should be doing. On
the occasion of Toyota’s 70th anniversary, we will reinforce our measures designed to
return to our core principle, which is to "repay the earth and society through
technological innovation (and contribute to enhancing the quality of life everywhere

Guiding Principles
 Honor the language and spirit of the law of every nation and undertake open and fair
corporate activities to be a good corporate citizen of the world.
 Respect the culture and customs of every nation and contribute to economic and
social development through corporate activities in the communities.
 Dedicate ourselves to providing clean and safe products and to enhancing the quality
of life everywhere through all our activities.
 Create and develop advanced technologies and provide outstanding products and
services that fulfill the needs of customers worldwide.
 Foster a corporate culture that enhances individual creativity and teamwork value,
 while honoring mutual trust and respect between labor and management.
 Pursue growth in harmony with the global community through innovative
management.
 Work with business partners in research and creation to achieve stable, long-term
growth and mutual benefits, while keeping ourselves open to new partnerships.

Toyota Percepts

 Be contributive to the development and welfare of the country by

working together, regardless of position, in faithfully fulfilling your
duties.

 Be at the vanguard of the times through endless creativity,

inquisitiveness and pursuit of improvement.

 Be practical and avoid frivolity.

 Be kind and generous; strive to create a warm, homelike

atmosphere.

 Be reverent, and show gratitude for things great and small in thought
and deed.

Locations of Toyota Facilities

Toyota Manufacturing Subsidiaries and Affiliates
 Start of
Main products
operations
Toyota Motor Kyushu, Harrier, Harrier Hybrid, Kluger, Kluger
Inc. Hybrid, IS, ES
Toyota Motor Hokkaido, Transmissions, transfers, aluminum wheels,
Inc. drivetrain parts, etc.
Toyota Motor Tohoku
Mechanical and electronic parts
Co., Ltd.
Hiace, Liteace, Voxy, Noah, Estima, Prius,
Toyota Auto Body Land Cruiser, Alphard, Ipsum, Townace,
Co.,Ltd. Regiusace, Coaster, Estima Hybrid, Alphard
Hybrid, LX470
Century, Crown, Corolla Spacio, Corolla
Kanto Auto Works, Ltd.
Fielder, Isis, Belta, SC, Auris, BLADE
Raum, MR-S, Scion xB, Corolla Axio, Corolla
Central Motor Co., Ltd.
hatchbacks
Gifu Auto Body Industry
Hiace
Co., Ltd.
Rush, Passo, Probox, Succeed, bB, Porte,
Daihatsu Motor,Co., Ltd.
SIENTA
Dyna, Townace, Liteace, FJ Cruiser, Toyoace,
Hino Motors, Ltd.
Hilux Surf

Toyota Industries Corp. Vitz, RAV4

Toyota continued its support of the ideals and spirit embodied in athletics by becoming,
for the third time since 2003, the Official Partner to the 11th IAAF World Championships
in Athletics, held in Osaka, Japan, August 25th-September 2nd. Through the sponsorship
and a global advertising campaign with the tagline,"Beyond Limits," Toyota aims to
communicate its support for athletes who, like Toyota, continually push themselves
further in pursuit of the ultimate goal.
A part from providing a fleet of 220 cars for use as official vehicles at this year's
championships,Toyota also supported a program to encourage new world records for
women's events by becoming the official women's bib sponsor
Toyota’s First FFV
Toyota do Brasil LTDA. (TDB) launched Toyota's first-ever flex fuel vehicle (FFV), a
vehicle which runs on gasoline, ethanol or any combination of the two, at a line-off
ceremony at its Indaiatuba Plant in São Paulo on May 29th. Representing Toyota's
commitment to developing environmental technologies, the locally produced Corolla
Flex and Corolla Fielder Flex are the first marketed Toyota models that can run on 100%
bioethanol. The introduction of the two models in Brazil, where bioethanol is widely used
as fuel and FFVs represent 83% of newly registered vehicles in the market, firmly
demonstrates Toyota's belief in listening to its customers. In the first semester of the year,
Toyota accounted for almost 33,000 of the more than one million vehicles sold in Brazil
during that period.

Island Adventure
Members of the Philippine motoring press had a wet and wild time at the Toyota Road
Trek 3, held May 31st-June 3rd in the archipelago's central islands. Bringing media
representatives to a variety of well-known destinations across the country, the annual
road trip is conducted by Toyota Motor Philippines Corp. to demonstrate the toughness
and versatility of its IMVs. This year, the event took over 40 participants on an island-
hopping adventure, enabling them to fully test the exceptional capabilities of the Innova,
Fortuner and Hilux vehicles.
A series of competitive, water-related activities made it a truly challenging and fun trip
that encouraged teamwork, camaraderie and friendship among all attendees. The event
was prominently featured in major newspapers and magazines, further boosting the
popularity of IMVs in the market.

A Way to Learn Road safety

Dedicated to promoting activities that help minimize traffic accidents in Pakistan, Indus
Motor Company Limited (IMC) in January launched a Toyota School Road Safety
Program. Through music concerts, skits by clowns and quizzes in schools, the pilot
program aims to educate children about road safety in a fun and memorable way. Twenty
schools in Karachi and around 18,000 children have already benefited from the program,
which is part of IMC's comprehensive corporate social responsibility initiative with the
slogan, "Concern Beyond Cars." IMC looks to expand the program to other schools in
Karachi and later to other cities, given the overwhelming response from the children and
parents who have so far participated.
 Main Report Analysis
Marketing Strategies of Toyota

Products:

Avalon

Camry

Camry Salora

Corolla

Matrix

Prius

4runner

Highrunner

Land Cruiser

Sequoia

Sienna

Price:-

As far as pricing strategy of Toyota is concerned. They are focusing on the very
segment of the market not only particular segment. Basically they are focusing on
official and business class people

Product Line
Avalon $26,625 $28,875 $31,075 $33,815
Camry $18,445(standard) $19,545(LE) $20,375(SE) $22,795(XLE)
Camry Salora $19,530 $21,025 $23,405 $26,942
Corolla $14,005 $15,050 $15,215 $17,780
Matrix $15,110 $16,590 $19,100
Prius $21,725
4runner $27,635
Highrunner $34,625
Land Cruiser $56,115
Sequoia $32,820
Sienna $23,625

Generic Strategies - Michael Porter (1980)

Generic strategies were used initially in the early 1980s, and seem to be even more
popular today. They outline the three main strategic options open to organization that
wish to achieve a sustainable competitive advantage. Each of the three options are
considered within the context of two aspects of the competitive environment:

Sources of competitive advantage - are the products differentiated in any way, or are they
the lowest cost producer in an industry? Competitive scope of the market - does the
company target a wide market, or does it focus on a very narrow, niche market?
The generic strategies are: 1. Cost leadership, 2. Differentiation, and 3.
Focus.

1. Cost Leadership

The low cost leader in any market gains competitive advantage from being able to many
to produce at the lowest cost. Factories are built and maintained; labor is recruited and
trained to deliver the lowest possible costs of production. 'cost advantage' is the focus.
Costs are shaved off every element of the value chain. Products tend to be 'no frills.'
However, low cost does not always lead to low price. Producers could price at
competitive parity, exploiting the benefits of a bigger margin than competitors.
Some organization, such as Toyota, are very good not only at producing high quality
autos at a low price, but have the brand and marketing skills to use a premium
pricing policy.

2. Differentiation

Differentiated goods and services satisfy the needs of customers through a sustainable
competitive advantage. This allows companies to desensitize prices and focus on value
that generates a comparatively higher price and a better margin. The benefits of
differentiation require producers to segment markets in order to target goods and services
at specific segments, generating a higher than average price. For example, Toyota
differentiates its product and service. The differentiating organization will incur
additional costs in creating their competitive advantage. These costs must be offset
by the increase in revenue generated by sales. Costs must be recovered. There is also
the chance that any differentiation could be copied by competitors. Therefore there
is always an incentive to innovated and continuously improve.

3. Focus or Niche strategy

The focus strategy is also known as a 'niche' strategy. Where an organization can afford
neither a wide scope cost leadership nor a wide scope differentiation strategy, a niche
strategy could be more suitable. Here an organization focuses effort and resources on a
narrow, defined segment of a market. Competitive advantage is generated specifically for
the niche. A niche strategy is often used by smaller firms. A company could use either a
cost focus or a differentiation focus. With a cost focus a firm aims at being the lowest
cost producer in that niche or segment. With a differentiation focus a firm creates
competitive advantage through differentiation within the niche or segment. There are
potentially problems with the niche approach. Small, specialist niches could disappear in
the long term. Cost focus is unachievable with an industry depending upon economies of
scale e.g. telecommunications.

Customer satisfaction
Toyota's believes in putting the customer first and aims to provide the best levels of
customer satisfaction as its main marketing strategy. Their dealers have also worked hard
to provide their high levels of customer support."

"In the last one year, Toyota has taken many initiatives, which has made Innova the most
successful product. Innova has successfully become a category creator.

We will continue to meet the ever-challenging customer expectations and will come out
with innovative marketing strategies.

With a change of guard at Toyota Kirloskar Motor Ltd., the company has evolved a new
strategy to capture 15 per cent market share in the Indian automotive segment. Effective
from January 1, Atsushi Toyoshima has been appointed Managing Director of the
company, replacing Sachio Yamazaki. "Competition is intense in the Indian market
for domestic and foreign companies. The Indian market is important for Toyota
with potential to aid its growth strategy," Yoshio Ishizaka, Executive Vice-President,
Toyota Motor Corporation, said. According to analysts, the Indian market would touch
annual sales of 1.2 million units by 2005. Last year, Toyota sold 3.8 million units
overseas, manufacturing six million vehicles at 56 plants in 25 countries. In India, the
Toyota Quails notched sales of 25,000 units since its launch last year, he said. Toyota's
strategy to corner a significant chunk of the Indian market involves "superior product
offering and dedicated technology". In this context, the change of leadership in
Toyota's Indian division is important, indicating a more important role for the company's
manufacturing base in Bangalore.

"Bangalore is an ideal location to meet all of Toyota's needs, including auto

components," Mr. Toyoshima said According to the managing director of Toyota
Kirloskar Motor, Atsushi Toyoshima, the decision to introduce Innova here (India) was
based on three factors. First, over the last five years, the C- segment (between Rs 5 lakh
to Rs 10 lakh) of the car market has grown by 20 per cent every year. The multi utility
vehicle segment has also grown at double-digit levels. Second, with an improving
lifestyle and better roads, the Indian consumer wants to take his vehicle for long drives
with friends and family. Third, there is a latent desire of customers, including those
owning MPVs, to seek attributes like greater interior space and overloading ability, while
passenger car buyers look for better styling and improved riding comfort. Innova brings
together the space and fuel economy of an MPV with the style, agility and power of a
sedan. Toyota Kirloskar Motor has described it as the first three-row seating passenger
car in the Indian market.

Growth of Toyota
Lasting growth for Toyota will depend on aligning our interests with the larger interests
of customers and the community. We must be a company where people think seriously
about the role and responsibility of their company in the world.

Our economic and industrial contribution in each region grows, for example, as we
globalize our operations. Another way to align our interests with the larger interests of
the community is through technology.

By the end of 1997, we will introduce the world's first new-energy transport that is
commercially competitive with conventional automobiles. That is when we will put a
hybrid-electric passenger car onto the market in Japan. Our hybrid-electric car will have a
gasoline engine to generate electricity or provide supplementary power to the wheels. It is
twice as fuel-efficient as conventionally powered vehicles of comparable size and
performance. Equally important, the value of its potential fuel savings could prove
greater than its cost premium over conventional vehicles. So, it actually could save
money for car owners.
Survival and growth in our industry will hinge on developing technologies for reducing
environmental impact of our products and operations, as well as improving
vehicular safety. Photos and text on the following pages introduce some of the
technologies we are developing to position Toyota as an environmental leader

Priorities for Toyota in the growth strategy :

• fortifying our product line

• asserting a competitive edge in technology
• accelerating globalization
• reclaiming market share in Japan
• cultivating demand in new business sectors

Measures for asserting a competitive edge in technology have centered on environmental

themes. We have introduced or demonstrated new power train technologies in the past
year that will make Toyotas run cleaner and greener than ever. Those technologies
include...
 • a direct-injection system that makes gasoline engines more efficient
• hybrid-electric systems that double fuel efficiency and reduce noxious emissions
• pure electric, "zero emission" vehicles that alleviate urban pollution
• Fuel-cell systems that could transform the automobile in the 21st century.

Market share of Toyota

Toyota Motor Corp. grabbed more U.S. retail market share than Ford Motor Co. in early
November and it was less than one share point behind General Motors Corp.,

Toyota, Japan's largest automaker, had a 15.4 percent U.S. retail market share a year
earlier.

Toyota plans to enter small car segment in India

World’s second largest automaker wants to get offensive in the Indian domestic auto
market. Toyota is very much interested in launching a small car here in the segment
currently dominated by Maruti Suzuki and Hyundai. Tata also has a decent presence in
the market with their Indica range of diesel vehicles. Toyota is at the moment carrying
out a feasibility study for launching such a vehicle in the domestic market where it has
models like the Innova and Camry amongst others. They have had an incredible
success with their stopped Qualis model and are selling Toyota Innova in large
numbers. T Ino, director (marketing), Toyota Kirloskar Motor Pvt Limited has expressed
that the Indian auto market is a huge one and has the capacity to involve more players in
the small car segment.
Toyota has a variety of interesting models in its global lineup, which it can consider to
launch in the Indian market. Some of these are Vios, Platz, and Passo. The company also
expects to break even here in India this year with all the accumulated losses were
expected to be wiped out during 2005. They also plan to invest around Rs 130 crores
during the current year to enhance efficiency.
Toyota also plans to open up another manufacturing plant here in India and is currently
looking for a location, which suits its requirement.
 COMPETITORS
• Hyundai Motors India Limited (HMIL)
A decade after the Korean War and during the period of reconstruction, Hyundai Motor
Company began its fledgling efforts at automobile manufacturing by entering into a
technology transfer agreement with Ford of Great Britain, receiving design and styling
from Ital Design of Italy, and assembling technology from both England and Japan, all of
which made the production of our first model car, the "Pony," possible. In just ten years,
in 1976 Hyundai began to export to the world market. In 1986, we entered the U.S.
market establishing the Excel as a new contender among small cars and promoting the
image of the Korean automobile industry.

Upon expansion of our Ulsan plant, which enabled Hyundai Motor Company to have a
large scale production base, and the founding of HM Canadian Corporation, which
established Hyundai throughout North America, we produced a record 10 million cars
and exported over 4 million, breaking records in a short span of time. No other
automobile company can boast of these figures over such a short time span. We also
poured our efforts in creating concept cars such as the HCD-I, followed by the HCD-II
and III, electric cars, and high technology hybrid cars that will bear fruit in the future
with their low pollution emissions, safety features, and environmentally-friendly
recyclable components. From Pony to Equus, Hyundai Motor Company is committed to
its growth as a mature company, constantly keeping in mind its customer-oriented
mottoes: "Customer Satisfaction" and "Create Value for Customers."

• Maruti Udyog Limited (MUL)

It was established in Feb 1981 through an Act of Parliament, to meet the growing demand
of a personal mode of transport caused by the lack of an efficient public transport system.

Suzuki Motor Company was chosen from seven prospective partners worldwide. This
was due not only to their undisputed leadership in small cars but also to their
commitment to actively bring to MUL contemporary technology and Japanese
management practices (which had catapulted Japan over USA to the status of the top auto
manufacturing country in the world).

A license and a Joint Venture agreement were signed between Govt of India and Suzuki
Motor Company (now Suzuki Motor Corporation of Japan) in Oct 1982.

The objectives of MUL then were:

 Modernization of the Indian Automobile Industry.

 Production of fuel-efficient vehicles to conserve scarce resources.
 Production of large number of motor vehicles which was necessary for
economic growth.
 Research Methodology
Objective of the study
The object of report is not only to focus on competitors but also to get the
competitive position in the national as well as international market through
customer satisfaction. These are as follows.

• To discover and translate the needs and desire of customer into

products and services so as to create the demand of the product
(through planning and producing planned product).

• To serve the customer through channel of distribution

• To face the keen competition

 • To know about the marketing strategies used by Toyota

• To know about the marketing strategies of the competitors of Toyota

• To find out the market share of Toyota

• To know where Toyota stands as far as the BCG –matrix models

concerned

Type of data
This project depends upon the primary as well as secondary sources which are as
follows.

Secondary source

• Balance sheet of the company

• Company website
• Books
• Internet

Statistical and Presentation Tools Used

SECONDARY DATA is represented:
 In the form of tables.
 By the way of BAR GRAPHS and SUBDIVIDED BAR GRAPHS
(Graphical presentation).
 Limitations of the Study
Since the road to improvement is never ending, so this study also suffers from certain
limitations. Some of them are as follows:

 Because of illiteracy, it was a time consuming method in which

continuous guidance was required.
 Questionnaire method involves some uncertainty of response. Co-
operation on the part of informants, in some cases, was difficult to presume.
 It is possible that the information supplied by the informants may be
incorrect. So, the study may lack accuracy.

DATA ANALYSIS
SWOT Analysis Toyota
Strengths
New investment by Toyota in factories in the US and China saw 2005 profits rise, against
the worldwide motor industry trend. Net profits rose 0.8% to 1.17 trillion yen ($11bn;
£5.85bn), while sales were 7.3% higher at 18.55 trillion yen. Commentators argue that
this is because the company has the right mix of products for the markets that it serves.
This is an example of very focused segmentation, targeting and positioning in a number
of countries.

In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second
largest carmaker with 6.78 million units. The company is still behind rivals General
Motors with 8.59 million units in the same period. Its strong industry position is based
upon a number of factors including a diversified product range, highly targeted marketing
and a commitment to lean manufacturing and quality. The company makes a large range
of vehicles for both private customers and commercial organisations, from the small
Yaris to large trucks. The company uses marketing techniques to identify and satisfy
customer needs. Its brand is a household name. The company also maximizes profit
through efficient manufacturing approaches (e.g. Total Quality Management).

Weaknesses
Being big has its own problems. The World market for cars is in a condition of over
supply and so car manufacturers need to make sure that it is their models that consumers
want. Toyota markets most of its products in the US and in Japan. Therefore it is exposed
to fluctuating economic and political conditions those markets. Perhaps that is why the
company is beginning to shift its attentions to the emerging Chinese market. Movements
in exchange rates could see the already narrow margins in the car market being reduced.

The company needs to keep producing cars in order to retain its operational efficiency.
Car plants represent a huge investment in expensive fixed costs, as well as the high costs
of training and retaining labour. So if the car market experiences a down turn, the
company could see over capapacity. If on the other hand the car market experiences an
upturn, then the company may miss out on potential sales due to under capacity i.e. it
takes time to accommodate. This is a typical problem with high volume car
manufacturing.

Opportunities
Lexus and Toyota now have a reputation for manufacturing environmentally friendly
vehicles. Lexus has RX 400h hybrid, and Toyota has it Prius. Both are based upon
advance technologies developed by the organisation. Rocketing oil prices have seen sales
of the new hybrid vehicles increase. Toyota has also sold on its technology to other motor
manufacturers, for example Ford has bought into the technology for its new Explorer
SUV Hybrid. Such moves can only firm up Toyota's interest and investment in hybrid
R&D.

Toyota is to target the 'urban youth' market. The company has launched its new Aygo,
which is targeted at the streetwise youth market and captures (or attempts to) the nature
of dance and DJ culture in a very competitive segment. The vehicle itself is a unique
convertible, with models extending at their rear! The narrow segment is notorious for it
narrow margins and difficulties for branding.

Threats
Product recalls are always a problem for vehicle manufacturers. In 2005 the company had
to recall 880,00 sports utility vehicles and pick up trucks due to faulty front suspension
systems. Toyota did not give details of how much the recall would cost. The majority of
affected vehicles were sold in the US, while the rest were sold in Japan, Europe and
Australia.

As with any car manufacturer, Toyota faces tremendous competitive rivalry in the car
market. Competition is increasing almost daily, with new entrants coming into the market
from China, South Korea and new plants in Eastern Europe. The company is also
exposed to any movement in the price of raw materials such as rubber, steel and fuel. The
key economies in the Pacific, the US and Europe also experience slow downs. These
economic factors are potential threats for Toyota .

Findings
 The strong industry position of toyota is based upon a number of factors
including a diversified product range, highly targeted marketing and a
commitment to lean manufacturing and quality.
 The company(Toyota) uses marketing techniques to identify and satisfy
customer needs. Its brand is a household name. The company also
maximizes profit through efficient manufacturing approaches (e.g. Total
Quality Management).
 Toyota is to target the 'urban youth' market. The company has launched its
new Aygo, which is targeted at the streetwise youth market and captures (or
attempts to) the nature of dance and DJ culture in a very competitive
segment.
 Toyota's believes in putting the customer first and aims to provide the best
levels of customer satisfaction as its main marketing strategy. Their dealers
have also worked hard to provide their high levels of customer support."
 Competition is intense in the Indian market for domestic and foreign
companies. The Indian market is important for Toyota with potential to aid
its growth strategy,
 They have had an incredible success with their stopped Qualis model and
are selling Toyota Innova in large numbers.
 While Suzuki-Maruti, Tata Motors, Hyundai, Mahindra & Mahindra and
Toyota command the top five positions in the domestic passenger vehicle
segment, Honda, GM and Ford are fighting each other for the sixth
position.

FINDINGS BASED ON
QUESTIONNAIRE
 OW NERS OF TOYOTA

YES
24%
YES
NO
NO
76%

INFERENCE:

 24% of the respondents were owners of Honda City

 CUSTOMER SATISFACTION

17%

SATISFIED
DISSATISFIED

83%

INFERENCE:

 83% of the Respondents were satisfied with their cars and the
services of TOYOTA

 However 17% of the Respondents were dissatisfied at the same

time.
 PREFERENCES OF BUYING A NEW CAR

40
30
20
10
0
TOYOTA HYUNDAI MARUTI HONDA

INFERENCE:
 18% of the respondents would prefer to buy a Toyota car against
its competitors.

 37% of respondents preferred for Maruti.

 21% and 24% respectively preferred for Hyundai & Honda.

INFORMATION ABOUT TOYOTA

12%
DEALERS
20%
PRINT MEDIA
T.V.
55%
INTERNET
13%
INFERENCE:
 Information through Internet and Print media accounts for more
than half or 75% of the information shared with the masses.

 Rest 25% was shared by T.V. and Dealers for providing the
information.

F UE L E F F IC IE NC Y O F T O YO T A
100 78
80
60
40 22
20
0
Y ES NO

INFERENCE:
 78% of the respondents felt that Toyota has the most fuel
efficiency.

 While 22% felt it isn’t the most fuel efficient.

 FEATURES OF TOYOTA
12%

8%
GOOD
10% VERY GOOD
NOT SO GOOD
70% SATISFACTORY

INFERENCE:
• 70% of the respondents felt that the features of the Toyota are
good.

• While 8% of respondents thought it was not so good, 10% thought

it was very good and 12% felt satisfactory about the features.
 FEATURES THAT BEST
DESCRIBES TOYOTA
38
40
29
30
18
20 15
10
0
HANDLING FUEL DESIGN COMFORT
EFFICIENCY

INFERENCE:
 Toyota is best known for its design & comfort.

 Then comes Handling and Fuel Efficiency.

INTERIORS OF TOYOTA

7%
3%
GOOD
16%
VERY GOOD
NOT SO GOOD
SATISFACTORY
74%
INFERENCE:
• The interiors of Toyota are very good according to 74% of the
respondents.

• 16% said it was very good, 7% said it was satisfactory and 3% felt
it was not so good.

WHAT SHOULD BE DONE TO

IMPROVE TOYOTA
13%
MAKE IT MORE
15% AFFORDABLE
CHEAPER SPARE
PARTS
72% MORE SERVICE
STATIONS

INFERENCE:
 If Toyota is made more affordable then it would win more
customers, a theory which was backed by 72% of the
respondents.

 15% and 13% respectively want cheaper spare parts and

more service stations.
 WHAT SHOULD BE DONE TO MAKE
TOYOTA THE BEST CAR
MAKE IT MORE
15 FUTURISTIC

MAKE IT MORE
10 SPORTY

GIVE IT A RETRO
60 LOOK
15
GIVE IT A
CONCEPT CAR
LOOK

INFERENCE:
 To make it the best car in its class it should be made more
futuristic which was felt by 60% of the respondents.

 15% of the respondents thought it should be made more

sporty.

 10% wanted it to have a retro look and 15% wanted to

give it a concept car look.
 HAPPY WITH AFTER SALES
SERVICES PROVIDED BY TOYOTA

15%
HAPPY
UNHAPPY

85%

INFERENCE:
 Overall 85% of the respondents were happy with the after
sales service provided by Toyota.

 15% were unhappy with Toyota due to poor after sales

services provided by them.
Annexure
 QUESTIONNAIRE FOR CONSUMER

A) NAME

B) ADDRESS

C) CONTACT NUMBER

D) INCOME GROUP

_________15,000-25,000 _________25, 000-50,000

_________50,000-75,000 _________Above 75,000

1. DO YOU OWN A CAR?

(i)YES (ii) NO

IF YES, THEN WHICH ONE?

(i)TOYOTA (ii) HYUNDAI (iii) MARUTI

2. HOW SATISFIED ARE YOU WITH THE SERVICES OFFERED BY

TOYOTA ?

(i)SATISFIED (ii) DISSATISFIED

3. IF SATISFIED, THEN ARE YOU HAPPY WITH THEIR CHARGES

AND TIMELY DELIVERY THEY WERE OFFERING?

(i)HAPPY (ii) UNHAPPY

4. IF GIVEN A CHOICE TO CHOOSE A CAR COMPANY, WHICH
COMPANY WOULD YOU CHOOSE?

(i) TOYOTA (ii) MARUTI (iii) HYUNDAI

5. WHERE DO YOU MANAGE TO FIND INFORMATION ABOUT

TOYOTA ?

(I)DEALERS (ii) PRINT MEDIA

(iii)T.V. (iv)INTERNET

6. DO YOU THINK TOYOTA HAS THE MOST FUEL EFFICIENCY

(I)YES (ii) NO

7. HOW DO YOU FIND THE FEATURES OF TOYOTA AS

COMPARED TO OTHER CARS?

(I)GOOD (ii) VERY GOOD

(iii)NOT SO GOOD (IV) SATISFACTORY

8. WHICH OF THESE QUALITIES DO YOU THINK BEST

DESCRIBES TOYOTA ?

(I)HANDLING (ii) FUEL EFFICIENCY

(iii)DESIGN (iv) COMFORT

9. HOW DO YOU FIND THE INTERIORS OF TOYOTA ?

(I)GOOD (ii) VERY GOOD

(iii)SATISFACTORY (IV) NOT SO GOOD

10. ACCORDING TO YOU WHAT SHOULD BE DONE TO IMPROVE
TOYOTA ?

(I) MAKE IT MORE AFFORDABLE

(ii) CHEAPER SPARE PARTS

(iii)MORE SERVICE STATIONS

11. ACCORDING TO YOU WHAT SHOULD BE DONE TO MAKE

TOYOTA THE BEST CAR?

(I)MAKE IT MORE FUTURISTIC

(ii)MAKE IT MORE SPORTY

(iii)GIVE IT A RETRO LOOK

(iv)GIVE IT A CONCEPT CAR LOOK

12. ARE YOU HAPPY WITH THE AFTER SALES SERVICES

PROVIDED BY TOYOTA ?

(I)HAPPY (ii) UNHAPPY

Conclusions
&
 Recommendations

CONCLUSION

While Suzuki-Maruti, Tata Motors, Hyundai, Mahindra & Mahindra and Toyota
command the top five positions in the domestic passenger vehicle segment, Honda, GM
and Ford are fighting each other for the sixth position. Incidentally, in the first five
months of the fiscal (Apr-Aug ’04) Skoda has moved to the tenth position, overtaking
Italian major Fiat.

Maruti Udyog (MUL), which has been the market leader in the mini, compact and mid-
size segments, retains its leadership position with sales of 1.9 lakh units, followed by
Tata Motors with 70,022 units, Hyundai Motor India with 48,360 units, Mahindra with
28,530 units and Toyota with 19,797 units.

Competitive pricing and a better value offerings were driving the sales of most auto
majors for the past few months. Despite a competitive business environment, most of the
car majors were able to hold on to their market shares in the April to August ’04 period.
The exceptions were Hyundai, Mahindra & Mahindra, Hindustan Motors and Fiat, who
saw their market shares fall marginally.

The market is slow and there are visible signs of discounting, particularly in the higher
end of the car segment. However, since entry level and compact cars are volume
segments, the slowdown’s effect is more visible here.
 For many automobile companies, it was a double whammy in August ’04. The truckers’
strike and adhikmas (inauspicious period) last month affected dispatches of most car
companies, including Maruti Udyog, General Motors and Tata Motors, resulting in lower
sales. The exceptions were Honda Siel Cars India, Ford India and Toyota Kirloskar.

RECOMMENDATION

1. Toyota should adopt the defensive marketing strategy because as being the second
largest car producer in the international market.

2. Toyota must at the moment carry out a feasibility study for launching a vehicle in
the domestic market where it has models like the Innova and Camry amongst
others.

3. Toyota should conduct market survey in Indian market for quails in order to know
the perception of Indian consumers.

4. Toyota should adopt an offensive marketing strategy for entering in the small car
segment. This market is dominated by Maruti Suzuki and Hyundai in the Indian
domestic auto market.
5. Toyota must plan out an ideal marketing producing capacity ,becaue it faces the
problem of over and under capacity in case of upturn and downturn of the market.
 BIBLIOGRAPHY:
Books referred: -
 Marketing Management 30th editon - Philip Kotler
 Marketing Management 2005 - T. N. Chabra
 Marketing Management 2006 - C. B. Gupta

Web Sites: -
 Google search engine
 www.toyota private limited.com