Rebecca Rogoschewsky
Johns Hopkins University
industry. Buyers of these vehicles still tend to be new adopters, not really the mainstream public,
as many are still sceptical about the cars. While fuel economy is important to consumers,
environmental benefits and fuel economy are not necessarily as important as driving experience
and cost. To match its targets for growth, Toyota will have to appeal to the mass public, not just
those technology-driven early adopters, in the select states where these vehicles are sold, before
expanding into other markets. Currently, Toyota has 60% of the market share of hybrid vehicles,
which is down from 68% a few years ago. During the same time period, Fords market share
increased from 9% to 16% (Tuttle, 2013).
Toyota now offers four makes of the vehicle, including the basic Prius, the more compact
Prius c, the more advanced Prius Plug-in, and the more spacious and family-friendly Prius v.
This means that consumers will now have the option to purchase a fuel-efficient Prius with the
body style and price that suit their needs.
Table 1.1 Potential Customer Segment Needs and Corresponding Features and Benefits
Targeted Segment
Customer Needs
Corresponding
Features/Benefits
Customer A:
A technologically advanced,
Numerous upgrades
First-time Prius
customers
customizable to individual
needs.
Customer B:
Current Toyota
of increased fuel
economy and
a hybrid model
hybrid.
Customer C:
Current Prius
customer
older models.
updated design.
price.
model.
Product Review
Prius
The Prius has a fuel economy of 51 mpg in the city and 48 mpg on the highway (50mpg
combined).
The vehicle offers combined benefits of an efficient gasoline engine, and a clean, quiet
electric motor with low emissions.
This models sleek body style and high-performance engine means it is fun to drive and
yet has high safety ratings in its class and comes equipped with Toyotas Star Safety
System.
New pricing for 2012 Toyota hybrids is lower than before (Toyota website). The 2013
Prius starts at $26,100 US, making it similar in price to non-hybrid vehicles of its size.
Prius c
Fuel economy of 53 mpg in the city and 46 mpg on the highway, making it an excellent
choice for young urban consumers.
Compact body style with nine fun, modern colours to choose from.
Prius Plug-in
Incredible fuel economy of 95/50 mpge (estimated miles per gasoline gallon equivalent),
as it plugs and runs on a combination of gasoline and electricity.
Starts at $32,000, but consumers can apply for a $2,500 tax credit in the United States.
Prius v
Highest fuel economy of any crossover, SUV, or wagon at 44/40 mpg (city/highway).
Extra cargo space, making this an excellent cost-effective choice for families.
Competitive Review
Ford, Honda and Chevrolet all have newer versions of hybrid vehicles that will result in
competition for the Prius.
Ford
Ford is becoming more competitive in the hybrid market with models such as the CMax and Fusion. These models are priced competitively compared to the equivalent
Prius model but do not always offer the same level of gas mileage, depending on the
comparable model.
Honda
Honda has three hybrid models that could compete with the Prius the Civic Hybrid,
the Insight, and the CR-Z. Again, these vehicles are at a slightly lower price point
than the Prius and the Prius v, which are the most comparable models. The body style
is sleek and modern, but according to the 2012 model AutoGuide.com review, the gas
mileage is once again not comparable to the Prius.
Chevrolet
The Chevrolet Volt is a plug-in car and is therefore competition for the Prius Plug-in.
The price point is very similar, but these vehicles dont yet have the popularity or
reputation that the Toyota hybrids do.
The first hybrid on the market; the one that started it all.
Toyota has a proven track record, and was the worlds top automaker of 2012.
Weaknesses:
Fuel economy can vary greatly depending on how the vehicle is driven.
Opportunities:
New model style options can appeal to new target audiences, such as families and
younger consumers.
Gas prices remain high and somewhat volatile in North America, increasing the appeal of
fuel efficient vehicles.
Threats:
Although Toyota was named automaker of the year, some will be cautious to purchase these
vehicles after product recalls within the past five years, and the subsequent negative media
coverage that followed.
Table 2.1 Strategic Matrix
Strategies to address opportunities, reduce vulnerabilities, and create defensive plans around
potential weaknesses.
STRENGTHS
OPPORTUNITIES
WEAKNESSES
safety rating.
of customers.
THREATS
Position Toyota as an
innovative automaker and
Focus on value to
new sales.
10
newest product, the Prius Plug-In, will be rolled out first in California, which is the most
successful market for the Prius to date. As the product is still in the growth stage, the company
will offer rebates for purchasing these green vehicles, as well as extended vehicle warranties.
Customers will be offered one-on-one Prius experience test-drives, where the dealership also
provides education on the cars new technology and how to get the best fuel mileage from their
Prius.
Pricing Strategy
Toyota is offering the new Prius for a slightly lower starting price. In this case, The Prius
c starts at less than $20,000, which is a very competitive price for a smaller car. Although
competitors prices are slightly lower, the Prius is a trendsetter in the hybrid market, and the
value, reputation, safety rating, and higher fuel efficiency are worth the slightly higher price. By
offering customers four different base models to choose from as well as various additional
features and options, the Prius provides consumers a wide variety of value-added pricing options.
Rebates should also be provided and used in the marketing communication pieces to encourage
the purchase of a green vehicle. In-car road side assistance could also be included to increase
the perceived customer value by offering a higher level of service to the customer. As Consumer
Reports (2013) suggests, this car is high value for cost. Therefore, lowering the cost further is
not recommended, as it could negatively impact consumers perceptions vehicle value.
Distribution strategy
Despite the fact that many automakers are moving toward reducing the number of dealers
in their distribution system, legal and cost barriers prevent this change from happening quickly
(Bucklin, Siddarth & Silva-Risso, 2008). It is important for consumers in target markets to have
11
access to dealerships, and it is important for the company to work closely with dealership
partners to ensure the success of vehicle sales.
Another important aspect of distribution is inventory management. Trunick (2007)
suggests that not having appropriate inventory in place (either too much or too little), can be
costly for any retailer. Because the Prius is a newer, and highly customizable vehicle, production
will somewhat be dependent on demand. However, if enough cars of each model are not
available for purchase, the customers perception of brand service and value can be impacted.
Ideally, Toyota would ensure a number of intermediate distribution sites in carefully chosen
locations, so that a vehicle is not sitting unsold too long in a dealership but can also be
transported to a dealership quickly if a customer is interested in purchasing the vehicle.
Marketing Communications Strategy
Audience Analysis
Demographics: The Prius customer varies depending on the model. Urban families,
professionals, or even college students are target audiences. The compact design of the Prius c
would appeal likely to women more than men, as would the family-style Prius v. The compact
model would likely appeal to women under the age of 30 or over the age of 45 due to limited
cargo space, which is not ideal for families. The wagon-style v model would appeal to women in
the middle of that age group, between 30 and 50 years old. The Prius, on the other hand, with its
sleek styling, road performance, and slightly higher price point, would more likely appeal to
professional men between the ages of 30 and 50.
Frequency: Customers will use their vehicle every single day and arent likely to buy a vehicle
more often than every four or five years.
12
Purpose: The Prius is more than a means to get from point A to point B. This car will make sure
you enjoy the ride. It will get you to work but it will also be fun to drive on the weekends and
has the cargo space and gas mileage for a stress-free weekend road trip.
Loyalty: Toyota customers are loyal, in part thanks to the reliability of their vehicles as well as
the companys reputation for quality. However, customers of other vehicle brands may be
swayed to fuel-efficient vehicles due to high gas prices, especially in North America.
Spend: These are not budget vehicles and will likely be most attractive to those who want a
premium feel with a low-to-mid-level price point. Premium purchasers will likely be more
interested in hybrid offerings from brands such as Lexus.
Table 3.1 Whole Brand Contact Inventory
Brand
Importance
Impression
Customer
Customer
Contact
Evaluation
Evaluation
Expectation
Experience
Message Sent
Resources
currently
allocated
Dealership
High
Mixed
sales teams
Excellent,
Consistent
We appreciate
honest service
with other
dealerships
know our
Adequate
reputation will
bring more
Dealership
Medium
Mixed
Quick, cost-
Varies
Depends. Good
Could use
Service
effective
depending on
service suggests
more to
Centres
service from
the
ensure
expert staff
dealership
proud of brand
consistency
13
High
Positive
reputation
Positive
Low-
Buying a Toyota
Could be
reputation for
maintenance,
is a good choice,
improved
great service,
good value
and a Prius is a
following
quality and
for product
value
and
certain
consumers
audiences
recalls in
2009-2010
can have
confidence in
their
purchase
Advertising
Medium
Positive
Realistic,
Depends.
The company
Could be
honest
Effective if it
has information
used to better
information
reflects
to share
promote new
about how
messages at
product will
other brand
meet customer
contacts
line of Prius
models
needs
Media
Medium
Positive
Unbiased
Customers
If unbiased
Adequate
information
depend on
positive
and coverage
a good car, it
coverage
of products and
honest
must be a good
company
feedback on
car
products
14
High
Mixed
Employees
Employee
If employees are
Could better
should be
stories are
use
brand
trustworthy
a good company
employees as
advocates and
and
speak
important
brand
ambassadors
positively of
the product
Word of
High
Positive
mouth
Website
Medium
Positive
Honest
Most Toyota
Word of mouth
feedback from
could always
friends and
happy and
information.
improve
other trusted
tell their
consumers
peers
Easy-to-access
Easy to
Provides tone
Adequate
information
navigate and
and feel of a
find
vehicle - Prius
information
Positive, but
and modern
Social
High
Mixed
media
Honest,
Mixed
Company is
unfiltered
reviews
responsive and
feedback
Community
Investment
Medium
Positive
Not enough
modern
Companies
Help create a
The company
Already do a
should also be
positive
great job
responsible
feeling
communities it
built on this
corporate
towards a
serves
citizens
company
and tie to
incentives
15
Negative
I
Social media
Dealership sales teams
Company reputation
II
Word of Mouth
Employees
Media
III
Dealership Service Centres
IV
Website
Advertising
Positive
Less important
Section 4: Action Programs and Budgets
Action Programs
Employee Engagement Strategy
Develop an employee testing and incentive strategy. The first part of the strategy
includes inviting various employees and dealership employees to provide feedback throughout
the product development process. This includes having employees test drive the new products
and developing an online portal where employees can provide feedback and comments on the
new designs and help provide input into newer models. The second aspect of the employee
engagement strategy involves offering employees discounted pricing, only slightly above cost,
on new models so that they are more likely to purchase the vehicles and become brand
ambassadors for the product. Staff will have access to the new models six weeks before the new
models roll out, and will then be encouraged to post information about the new vehicles and
incentives on social media as well, which will be part of a larger social media campaign.
16
17
or vehicle donations, could be well-aligned with a major selling feature of the Prius its reduced
environmental footprint. Advertisements highlighting community partnerships will be
developed, in conjunction with media events to announce partnerships and investments in
various communities.
Dealership Sales Teams
Customer service is vital to a companys success. If customers have a negative
experience, they will share those experiences through social media and word of mouth. This can
limit the effectiveness of media and advertising campaigns. Additional investment in customer
service can be used to ensure employee training targets the importance of customer service, to
implement customer satisfaction survey incentives, and to extend versions of employee vehicle
purchasing incentives to dealership partner employees. Ensuring employees are educated in
customer service and are invested enough in the brand to act as brand ambassadors, can help
ensure a higher level of customer service, which can help attract new customers. By using the
sales force to personally contact customers who have purchased a Prius in the past, they can gain
insight into whether a customer is looking to upgrade a vehicle and offer them further incentives
to test drive and purchase a newer model.
Website
A companys website is often the first place a customer experiences the brand. Toyotas
Prius website is modern, clean, and easy to navigate and reflects the value of the brand. A space
for customer and employee testimonials, as well as a social media feed, are important to link the
various channels, messages and incentives.
18
Advertising
Advertising is important way to reach the target audience and each customer group
should receive tailored messages through very specific channels. To reach customers in Group
A, an initial advertising campaign utilizing television, print and online ads would be effective in
presenting the features of the Prius to the target audience. Ad placement could include social
media, online advertising on major news sites and auto sections of the sites, as well as print
newspapers in both the news and driving sections. These ads would be effective in targeting the
professional or business-focused audience. College papers could be targeted to reach those about
to graduate to promote models such as the Prius c, and morning shows could be useful in
promoting the new v model to women in the target audience, who would influence family vehicle
decisions. Following the initial campaign, a secondary campaign will focus on community
investment and employee and new customer testimonials, in conjunction with social media
campaigns and media events. Lastly, a direct mail campaign could be implemented to reach
first-generation Prius owners, offering incentives for trade-ins and purchases of newer models.
Marketing Investment
Allocation of marketing dollars is included in the Return on Customer Investment
spreadsheet below. The expenditures are aligned with the specific channels, messages and
incentives developed to reach target audiences. The total marketing communication budget is
$4.9 million, which leaves and additional $100,000 to be used as needed upon evaluation
throughout the campaign. The category demand, or goal for increased revenue, is based on a
10% increase overall in sales based on the 236,000 Prius sales in 2012.
19
Aggregated
Customer
Group
Behavioral Goal
7800000000
Group B:
Switchers
from other
Toyota model
Increase
Group A:
First Time
Prius Buyer
Increase
Group C:
Previous
Prius
customers
Maintain
390000000
195000000
195000000
60.00%
234000000
20.00%
39000000
20.00%
39000000
70.00%
55.00%
65.00%
30.00%
45.00%
35.00%
70200000
17550000
13650000
20.00%
72.0%
-30.00%
14.0%
-5.00%
19.0%
Noncommunication costs
Contribution Margin %
Contribution Margin $
Scenario A: No Communications
Investment
7
positive or negative %
280800000
27300000
37050000
-196560000
-15015000
-24082500
10
11
-$
12
Net contribution
84240000
12285000
12967500
13
500000
50000
20000
14
Radio Advertising
100000
5000
15
Consumer Magazines
300000
25000
16
Direct Mail
500000
250000
500000
17
Sales Promotion
250000
50000
50000
18
Public Relations
100000
50000
35000
19
Special events/sponsorships
1000000
200000
15000
20
Custom Media
250000
50000
21
200000
200000
200000
22
3200000
880000
820000
23
Estimate %
36.00%
0.00%
15.00%
24
81.6%
20.0%
23.0%
25
318240000
39000000
44850000
26
222768000
21450000
29152500
27
3200000
880000
820000
28
Net contribution
92272000
16670000
14877500
ROCI Calculation
29
84240000
12285000
12967500
30
92272000
16670000
14877500
31
8032000
4385000
1910000
32
Incremental ROCI
39.84%
20.07%
42.93%
20
Section 5: Summary
This marketing plan aims to using targeted messages and incentives to increase the
market share of the Toyota Prius in the North American hybrid market. As stated in the current
market situation, the Prius already holds 60% of the hybrid market share, but this has declined in
recent years. This strategy aims to reverse that pattern and increase sales from the previous year
by a minimum of 10%.
As outlined in the SWOT Analysis, one of the main threats to the Prius is the increased
competition from North American automakers who are releasing new, competitively priced
hybrid models. However, price is only one aspect of brand value, and the Prius`s competitive
advantage is that their reputation and fuel economy is superior to other models. Marketing
materials will build on their reputation and continue to highlight the strengths of these models,
using both informative marketing materials, supplemented with a more grassroots, customer and
employee-centred approach.
The $4.9 million investment in marcom activities is targeted at the three main customer
section, based on the current brand inventory assessment. Based on the Return on Customer
Investment calculations, this targeted investment will have a significant impact on revenue from
Prius sales. As outlined in Table 4.1, Prius will see a 16% increase in sales due to marketing
activities targeted to new customers, or Customer Group A, alone. For Customer Group C, or
previous Prius customers, without an investment in targeted marketing activities, Prius will see a
loss of 5% of these customers; however, as a result of the proposed strategy, this customer group
will instead increase by a projected 20%. In comparing the incremental gains and losses in the
first scenario, with no marketing investment, and the proposed marcom plan across all three main
21
target audiences, it is evident that the $4.9 million marcom investment will result in an additional
$14.3 million in revenue for Prius.
22
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