Consumer behaviour is the study of consumers about what they think, like, dislike & select between different options. It is about how their behaviour affects to an organization. It is the study of consumers who go through various stages of pre & post purchase of goods & services. This report is written to the managing director of Toyota. In this report, the key issues of consumer behaviour are discussed which the company is facing. These are situation analysis of the company, target market, decision making process, influences on buying behaviour & marketing strategy recommendations. It is going to help to understand consumer behaviour & company could target the market accordingly.
Company’s background
Toyota is an automobile manufacturing company. The company is based in Japan and was founded by a Japanese manufacturer Toyoda Sakichi in 1926. Nearly 600 subsidiary companies are involved in the production process of Toyota. In 1999, the company got listed on the London stock exchange & New York stock exchange.
Historical facts
Toyota was established in 1924 with the setting up of Toyota model G automatic loom. Vehicles of Toyota are sold in more than 170 countries & regions and employ more than 320000 people in the world. The company is largest in the Japan & has second place in the world. The company has a large market share in America & Europe.
Vision
It’s vision is to lead in motor vehicles industry by introducing new technologies.
Mission
Toyota’s mission is to be a mobility leader by attracting customers with highly valued products & services also aiming at providing innovative & better quality (Heitz-Spahn, 2013).
Current market situation Analysis
Toyota has outperformed in the past few years. The company has a strong record of quality. Innovative production process & to provide great quality at best prices is the core competency of organization. The company’s production system is based on lean manufacturing concept which includes innovative practices. Company’s distinctive competency is competitive advantage that has given a different identity to Toyota (Lantos, 2015). Since 2010, the company’s total revenue has grown up by 50%. In 2015, the company’s total revenue was 27.2 trillion yen and it increased by 3.4% & reached to 28.4 trillion.
Industry information
Company’s main focus is on the automotive industry but is also involved in the process of robotics, material handling & textile machinery. The company is leading auto industry in innovation since 2015. The company is also listed among the top 20 on IPO list and is the only automaker company.
Competitors
Toyota has fierce competition with Hyundai, Honda and Ford. There is good competition between these brands & Toyota is leaving behind the competitors & leading in the automobile industry.
Market share
In 2008 Toyota was announced as the world’s largest automaker and its market share stood at 13.8%. It had a global market share of 11% in 2015 and it surpassed General motors. North America has the largest market share & Japan has the second largest market share of the company.
Marketing Strategy
When the company was established then the marketing was considered as an important tool of promotion for attaining success. Good promotional tools help to win the trust of customers which brings growth to the company.
Advertisement: Toyota is one of the biggest advertisement spenders which is 1.6% of it’s revenues (Goh, Heng & Lin, 2013). It includes print & electronic media & outdoor advertisement.
Dealers’ network: Vehicles are sold in 190 countries through 170 distributors. Network of dealers is maintained through these distributors.
PEST Analysis
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Political factors · Policies of government: Ease policies of government give freedom to Toyota expand & regulate business. · Political stability: Political stability has positive effect on the businesses. It has increases revenues & profits of Toyota (Oyserman & Schwarz, 2017). · Eco-friendly products: The government can satisfy environment expectations by producing eco-friendly products.
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Economic factors · Better economic condition: Better economic conditions provide the opportunity to Toyota for better employment. · Higher purchasing power: It leads to more sales & profits. · Growth of developing countries: Growth of developing countries leads to more demand for cars.
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Social factors · Increasing interest in top models: Society’s interest is increasing in top model cars which is status symbol also now days. · Focus on localization: Focus on localization is given to connect local customers. · Wealth gap: It is threat for the Toyota because only the top & middle class remains the target area.
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Technological factors · Better brand technology: Better the technology higher the sales are of Toyota. · Innovative brands: New technology leads to innovative brands. · Effective marketing: Technology leads to effective marketing of Toyota products.
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Environmental factors · Impact: Government is also supporting Toyota because of it’s environment impact. · Sustainability: Toyota is investing in sustainability. · Environmental protection: Toyota is protecting environment with it’s fuel saving technology. |
Legal Factors · Laws: Labor laws & quantity laws do not result loss of Toyota. · Passenger safety: Toyota is protecting passengers with safe air bags. · Education& training programs: Toyota conducts training & programs to corrupt prevention measures. |
SWOT Analysis
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Strengths: · Huge market share: Toyota is on second rank in the world & has huge market share. · Superior quality of vehicles: Toyota provides reliable & high quality products. · Focus on Research & Development: Toyota spends the most on Research & Development among all competitors.
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Weaknesses: · Increasing costs: Toyota has increased costs due to inflation is becoming weakness. · Toyota has competitors such as Honda, Hyundai & Ford. · Toyota’s sales are declining due to increased competition.
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Opportunities: · Joint venture with other companies has increased opportunity for more production & innovation. · Declining interest rates & automotive taxes has increased opportunity to Toyota for selling vehicles. · Demand is increasing for full efficient cars & Toyota has such quality. |
Threats: · Increasing exchange rate of Japanese yen is becoming threat to Toyota. · Toyota is facing threat because of innovations by other competitors. · Uncertainty of oil prices declines the demand for cars. |
Market segmentation helps Toyota to know target areas. It divides a market into smaller groups on the basis of need, taste, income or habits. A company can gain competitive advantage by focusing on the target market (Solomon, 2014). Buyer’s characteristics on the basis of which markets segmented are:
Demographic factors:
Buyers who are males & are of age 25 & more having income of $5000 & above are supposed to be well informed & qualified adults. The target of Toyota has been adult age group & these are middle to high income customers (Ostinelli, Luna & Ringberg, 2014).These customers go for the car models like avanza, vios, camry & fortuner.
Psychographic factors:
In the psychographic segment, Toyota has targeted the family size & people of middle income group. These people have general requirements & are supposed to spend on eco-friendly models such as camry , etios & corolla altis. These cars have high comfort & reliability.
Behavioural factors:
Choice of car depends upon the age, taste & requirement of consumers. Like sporty look car attracts to teenagers & kids. Families prefer more to buy reliable & economic cars.
Geographic factors:
Toyota targets market on the basis of geographical considerations. In the tropical countries there is need of reliable cars which can be driven roughly such as innova & hilux. So, country like Singapore has got better option of cars from Toyota.
Decision making process of Toyota includes PDCA. PDCA is plan, do, check & act. It is taught to each employee of organization. This process is used for continuous improvement. Decision making process of Toyota is:
3.1- Problem recognition:
The step of problem recognition initiates a purchase decision. Problem recognition results when difference is found out in the actual product & the product a customer wants to purchase. First nature of problem is known after that the methods for measuring problem recognition & then the market strategies are find out.
Market induced: It is marketer’s action that leads to not to content to customer’s real situation. Advertisement such as hybrid cars creates insecurity to have them so that a consumer can save the cost of petrol & diesel.
New stage in life: New products & services are launched in the market to solve the problem of consumers. Problem recognition happens when the innovative products are launched & comes in the notice of consumers.
Information search:
Information search is the second step in the decision making process. Once a consumer recognizes a problem, it can be satisfied by purchasing a product or service.
Level of risk: Level of risk is low when it is given by the market experts. When a person does not have relevant information, then the level of risk is high.
Level of product knowledge: To make a purchase decision a consumer searches for the information. Initial search is made by the past experiences and knowledge regarding various products. The information received refers to internal search (Heitz-Spahn, 2013). External sources can be friends, relatives, public media such as advertisement & newspapers and market experts.
Evaluation:
In this stage, consumer thinks & reminds of the options which the consumer can buy & are suitable to satisfy the needs. In this stage focus is given on options to make purchases.
List of evoked set: The various purchasing options such as different brands are considered in evaluation processes which are known as list of consumer’s evoked set.
Compensatory & non compensatory rules: Compensatory rules provide sound performance of Toyota & are simple and understandable. To understand non-compensatory rules it is must to understand mathematical concepts to evaluate.
Evaluation criteria: Car buyers may have single criteria & multiple criteria depend upon their preference. Single criteria can be price and multiple criteria are fuel efficiency, speed, quality, price, performance & warranty.
Purchase:
Once purchase decision is made a consumer stops searching & evaluating about the alternative brands.
Availability of products/ substitute product: A person chooses to buy a brand, but can implement the plan before making final decision (Juster, 2015). It is not necessary to buy the product which was decided by consumer earlier. It can happen due to unavailability of products.
Retail factors: There are many retail factors such as consumer preferences, innovation & technology. While taking decision if a consumer faces such changes then there is possibility to change the purchase decision.
Post purchase evaluation:
The post purchase evaluation stage arises after purchase. A consumer’s response can be known only after using the product.
Post purchase feelings: A consumer can be satisfied only if the performance of car matches with the expectation of consumer and a satisfied consumer is always happy. A consumer is unhappy when the performance is below expectations; as a result the consumer is dissatisfied. A consumer is just neutral when the requirement is just fulfilled & don’t get any additional benefits (Gruber & Schlegelmilch, 2014).
A number of strategies can be used to reduce cognitive dissonance such as provide consumers, products of good quality that always meet their expectations. Marketers should be well aware of their advertising tools that it does not create confusion (Becerra, Henriquez & Guzman, 2014).
Buying behaviour is influenced by innovation of cars & brands, motivation from friends & family, preference towards brands, knowledge from colleagues & family members.
Social class:
Social groups are not made of formal groups, they are formed by individuals. There are various features of social class which differentiates from each another like education level, behaviour, attitude, lifestyle & values. Toyota has variety of options for every group of society (Vida, Damjan & Fairhurst, 2015).
Opinion leadership & diffusion of innovation:
Toyota has leadership in brands because of it’s techniques, knowledge & presentation. Company attracts customers by diffusion of innovation (Ghose, Ipeirotis & Li, 2014). The company keeps on adding new feature to the cars.
Personality & self-concept:
Every person is different from another in terms of personalities, it affects their buying decision. So buying cars differentiates on the basis of class (Claiborne & Sirgy, 2015). A person who belongs to higher class & maintains good personality will surely prefer to buy top models like fortuner & lexus.
Perception:
Perception is absorbing the situation & taking decisions accordingly. Every person has different perception to liking & buying things. Some people think that only the top models are good & prefer to buy those. It is just the perception of humans which define their interest to buy cars.( Mullen & Johnson, 2013).
Personality & self-concept:
Personality is psychological traits how people see it. It makes a person unique. Traits of personality are:
Openness: How open a customer is to new experiences.
Extraversion: Extraversion is how shy a customer is to accept innovations (Bossuyt, Van Kenhove & De Bock, 2016).
Neuroticism: How liable customers are to negative mental states. When any problem occurs in any vehicle, this is how a customer deals.
Self-concept is how a customer sees himself positive or negative. Consumers buy products to become a better version of them.
Age:
Age influences to buying behaviour of customers. Persons who are above 60 are stereotypes and prefer to buy reliable & economic cars. They are happy with the old method of cars. Persons who are adult prefer to buy sport cars as it reflects their personality (Griskevicius & Kenrick, 2013).
Marketing Strategy
Toyota’s target market is segmented on the basis of preference & taste of consumer & local market conditions. The company has grown from a small business to large empire in the automotive industry. The four P’s of Toyota defines the firm’s strategy for it’s target market:
Products:
Toyota is the best-selling brand. The company provides both tangible & intangible products. Cars & vehicle parts come in the tangible products. Intangible products cover financial services, car services & warranties (Zhang, 2015). Toyota production mix includes:
Toyota automobiles
Material handling equipment
Welcab series
Textile machinery
Spare parts & accessories
Lexus automobiles
Prices:
Toyota’s price segment defines how the company sets price for it’s products. Toyota adopts two pricing strategies- market oriented pricing depends upon the condition & Prices of other companies & value based pricing is used on the basis of actual & perceived value of the product. It is used for the luxurious cars (Aviv, Wei & Zhang, 2015).
Place/ Distribution:
This element defines the place where a customer can get products. Before choosing a place, different segments of the market should be understood (Jost, 2017). Main places for distribution are:
Dealership: Toyota believes on dealers & sales personnel to sell it’s products in the target market.
Retailers: Retailers also sells the company products such as spare parts.
Promotion:
Toyota uses promotional activities to communicate with the target market (Wrenn, Loudon & Della Bitta, 2014).Promotional activities are:
Direct selling: Direct selling is done for corporate clients.
Personal selling: Personal selling is used by Toyota in which dealer sale personally to potential buyers.
Sales promotion: Special deals & offers are provided by Toyota to promote products.
Marketing Strategy Recommendations
Penetration Pricing Marketing strategy improvement:
Toyota could improve penetration pricing strategy by initially selling at low prices & once the brand is established, can slowly increase the prices.
Social media marketing strategy improvement:
Toyota can improve it’s social media marketing strategy by studying competitor’s performance & can promote it’s products through new platforms of media.
Conclusion
From this report, it is understood that Toyota always put quality first. Company’s situation analysis, target markets, target market decision making process, social, psychological & personal influences on buying behaviour & marketing strategy recommendations are sign of best customer service. To understand consumer’s requirement it is necessary to understand market segment which are demographic, political, geographical, psychological & social. Market segments are evaluated on the basis of size & growth, structure & resources. Fast growing segments not always attracts the company (Morales, Amir & Lee, 2017). Marketing strategies also helps to understand customer’s choice & preference. Consumer’s preference is for safety & more air bags and they are getting good service from Toyota. Advertisement has great impact on customers which helps companies to sell it’s cars and other accessories. Customers are happy & satisfied from Toyota.
References
Aviv, Y., Wei, M. M., & Zhang, F. (2015). Responsive pricing of fashion products: The effects of demand learning and strategic consumer behaviour. Working Paper, Washington University.
Becerra, E., Henriquez, M. C., & Guzman, M. C. (2014). Perceived Security Risk on Consumer Purchase Behaviour. ACR Latin American Advances.
Bossuyt, S., Van Kenhove, P., & De Bock, T. (2016). A dirty store is a cost forever: The harmful influence of disorderly retail settings on unethical consumer behaviour. International Journal of Research in Marketing, 33(1), 225-231.
Claiborne, C. B., & Sirgy, M. J. (2015). Self-image congruence as a model of consumer attitude formation and behaviour: A conceptual review and guide for future research. In Proceedings of the 1990 academy of marketing science (AMS) annual conference (pp. 1-7). Springer, Cham.
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Gruber, V., & Schlegelmilch, B. B. (2014). How techniques of neutralization legitimize norm-and attitude-inconsistent consumer behaviour. Journal of Business Ethics, 121(1), 29-45.
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