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Brand Improvement Recommendations for Toyota

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Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UK Essays.

Published: Wed, 07 Feb 2018

Introduction

The modern age of business can be defined as age of competition. The competition within an industry is gradually increasing with the expansion of business as many new players are entering into the market. There are several reasons behind this intensifying competition. Firstly, globalisation is one of the primary reasons for expansion of trade and business that lead to increase competition. Many business organisations have found greater opportunities in overseas market, and free trade policies and agreements between multiple countries facilitated their market expansion programs. The domestic markets have turned into global markets that heightened competition rivalry among existing domestic and new multinational enterprises. Since last two decades, the society has been experiencing a rapid technological improvement. The technological advancements have led to change the structure entire trade and business. The management tasks and operational process are now backed with technology like e-commerce and e-business. A better grip of technological advancement helps a business organisation to gain an upper hand position. Finally, enhancing economic condition of consumers and increasing their disposable income have strengthened their purchasing power. This has also changed their consumer buying behaviours and they have developed their specific brand preferences (Vashisht, 2005, p.68).

In the modern and competitive business world, business organisations always try to position itself in market for avoiding unnecessary competitions. In this process they aim to achieve strong competitive advantages and core competencies that enable them to gain upper hand position in the market. There are multiple ways to achieve competitive advantages; however, brand development is the most preferred way for creating high business value. The increasing demands of brand development is due to two primary factors i.e. urge for acquiring higher market share and increasing concern towards consumer value. The modern management style and thought process of decision makers have transformed. The modern management concept more focuses on long term benefits by creative a sustainable businesses environment where stakeholders’ wealth and value creation is the first priority. When a company is able to meet these responsibilities towards stakeholders, society, community and environment, it is able to create a high brand image in the market. Managements in modern organisation culture follow management theories and models which are very effective in achieving common organisational goal. In this respect, they concentrate on two-way communicational system within cross-functional teams and with its consumers. For example, the existing management system deliberately tries to implement integrated marketing communication that focuses on better marketing strategy for enhancing consumer values. These efforts made by the modern managements are very helpful in brand development and hence, they try to draft specific plans for branding strategies.

This paper will attempt to deal with brand improvement strategies for Toyota Motor Corporation and primary aim of this paper is to offer a plausible set of recommendations based on findings of primary research and secondary research data analysis. At first, a brief description of Toyota Corporation will be offered to understand fundamentals of it. The second section will explain the research question and objective based on which the entire research methodology will be constructed to obtain viable and valid results. The third section will present theoretical background and models relating to marketing and branding. Marketing and branding are interrelated with each other and the later is an integral part of marketing. Multiple marketing theories and models are very helpful for brand development. Moreover, many scholars have developed brand specific theories and models which facilitate brand management tasks. The fourth section will include the research methodology, and research framework will be framed as per the requirements of this research paper. Finally, based on data analyses and its findings, the entire project will be summarized and a set of credible recommendation will be developed.

Chapter 1

A Company Overview: Toyota Motor Corporation

Toyota Motor Corporation is a multinational automobile company and it is famous as Toyota in global market. The company is a Japan-based company and it is present in the most of the international markets. Sakichi Toyoda laid the foundations of automobile company and latter, in 1933, his son Kiichiro Toyoda opened an automobile department after conducting an extensive research on engines powered by gasoline. Automobile department was known as Toyoda Automatic Loom Works, Ltd. One of the sister company of Toyota, called Hinode Motors (now known as Aichi Toyota) introduced its first A1 prototype cars and G1 truck during 1935. In 1937, Kiichiro Toyoda established Toyota Motor Company Ltd. and in 1938 he started producing SB trucks in its Honsha plant in 1938 (Toyota-a, 2011). Toyota brought a revolution in automobile industry of Japan during 1930s to 1950s by incorporating innovation and growth oriented business model.

At present, Toyota is one of the leading and the largest automobile manufacturing in the world. It is also one of the pioneers in automobile innovation which is the company’s core value. The technological expertise is prime competitive advantage that has helped the company to cater the global automobile market. Since the inception of Toyota, the company is committed to produce reliable and value added vehicles, Innovation is the major tool for the company and it also uses its technological expertise in meeting social and environmental responsibilities. In order to operate in the global market, the company has formed its seven specific guidelines and principles. These principles mainly include with business ethics, respects and honour for every country and its culture, and develop a growth oriented organisation with the business partners etc (Toyota-b, 2011).

Presently, Toyota’s global headquarter is at Toyota City, Aichi of Japan and its president and representative director is Akio Toyoda. As of March 31, 2010, the company owned nearly 397.05 billion yen of capital. It has a number of subsidiaries and affiliated companies over the world and currently, it has nearly 320,590 employees in its international business (Toyota-f, 2011).

Currently, Toyota is trying to use its innovation for bringing development in the society and environment. The company has realized increasing negative impacts of industrialization and carbon emission from increasing number of vehicle. Therefore, the company is now focusing on eco-friendly cars like hybrid and electronic cars. Toyota has identified three major environmental issues relating to its vehicle manufacturing and hence, it has developed and incorporated necessary steps for making the things better for environment. Firstly, it attempts to enhance its transmission and engine efficiency by downsizing measures. Secondly, energy management is another major task for Toyota in this respect. Finally, for reducing overall vehicle load, it tries to lessen rolling resistance, air drag and vehicle mass (Toyota-c, 2011).

Quality and safety are two major parameters for Toyota and hence, the company strive to bring constant development in its operational and management process. Toyota’s production system “is steeped in the philosophy of “the complete elimination of all waste” imbuing all aspects of production in pursuit of the most efficient methods” (Toyota-d, 2011). The global operation of Toyota is primarily based on two concepts of modern management. “The first is called “jidoka” (which can be loosely translated as “automation with a human touch”) which means that when a problem occurs; the equipment stops immediately, preventing defective products from being produced” (Toyota-d, 2011). The second concept is the just-in-time process that helps it to maintain a smooth process of operation without maintaining high inventory.

Table 1: Consolidated Vehicle production

As Toyota has been able to capture significant share of market in these regions, its financial position has been quite strong. The following table and graph present key financial performance indicator and sales revenue by region.

Table 2: Consolidated Performance

As per the above figure and table, during 2009, Toyota faced loss due to the effect of global economic crisis. However, with the recovering economy, the company has been able to regain high profitability. From Japan and North American market, Toyota earns the highest revenue. Besides, from other markets like Europe and Asia, the company generates high revenue.

Toyota was in the face of a grim crisis when one of its leading models of the Lexus and Prius brand was badly hit by a series of manufacturing defects in the US which led to loss of innocent lives. The company had to pay a major price for this defect as its public relations strategy was widely criticised. In addition to this the company had to face major lawsuits which led to payment of hefty fines by the company and large scale product recall that had a wide impact on the brand image of the organization.

The discussions have pointed out the fundamental features and condition of Toyota that make it a successful company in the global automobile market. The efficient operations with technological expertise are the primary base of the company. In each market, it has developed trust and confidence among the target consumer group and hence, it has been able to capture higher market share.

Research Question

The research paper will be looking at the branding strategies which Toyota may adopt to augment its tarnished brand image. The discussion will be carried out with an analysis of earlier branding strategies of Toyota. Adding to it, some relevant branding strategies of other leading organisations will also be taken into account; so that, an appropriate branding framework can be developed for the company taking references from the company as well as its competitors.

Chapter 2

Literature Review

Branding

“[Branding is] a 15-second elevator pitch that every employee in the organization can not only get and articulate, but can talk about their role in bringing that to life” -Davis, M. S. (Wiley, 2003, p.1). In today’s competitive world of business, marketing and advertising have significant contribution to create ‘branding’ of any product or service or may be of a whole organisation.

The significant portion of branding has experienced a dramatic shift in the last few decades. Both the traditional branding and the role of brands were subject to continual review and redefinition. According to Kotler, a brand can be defined as “the name associated with one or more items in the product line that is used to identify the source of character of the item” (Guzman, n.d., p.1).

The American Marketing Association (AMA) has defined a brand as a name, sign, term, design symbol, design or a combination of them which are intended to categorize the products and services offered by one seller or group of sellers. The brands are also used to differentiate them from those of their competitors. Keller has expressed a different view. According to him, whenever an organisation introduces a new name, symbol or logo for a new product, he or she has created a brand. However, today those brands mean much more than that. According to these definitions, in simple term it would not be wrong to say that the brands act as identifiers. Earlier, brands and brand building processes would be thought as just another step towards the marketing or selling off products. Since a long time, brands were treated as a secondary step of the marketing process. According to Kotler, branding has become a significant issue in the product strategy.

The brand communication strategy has its focus towards representation of the brand and the creation of the brand image. In the year 2000, Aaker and Joachimsthaler mentioned that as per the traditional branding model, the objective is to develop the brand image (Ali, 2007). The brand image is a strategy element driving the short term results of the product as well as the organisation. In the year 1997, Kapferer mentioned that the brand is an external sign whose responsibility is to disclose the hidden qualities of the product or service (Nijte, 2005, p.20). In today’s competitive business environment, the challenge is to develop a string and distinctive image. The brand is expected to serve as the identifier of a product by displaying the distinguishing elements from the competition.

Powerful brands develop meaningful metaphors in the consumers’ minds. The meaningful images are created through development of brand image and enhancement of reputation by differentiating and potentially having an affirmative influence on the consumers’ buying behaviour.

The Keller Model has a considerable contribution in the branding theory. The model has identified the concept of customer based brand equity and the brand hierarchy. According to Keller, brand equity is the effect that the brand knowledge would have on the consumer response to the brand marketing, which would have the effect happening when the brand is known and the customers would possess favourable, strong and unique brand associations. This customer-based Brand Equity (CBBE) model has identified about four steps, representing the questions asked by the customers and displaying a branding ladder. In this model, each of the steps is dependent on the achievement of the earlier one. All these steps consist of six brand building blocks which would have a number of sub-dimensions. While building a strong brand, the objective is to reach at the apex of the pyramid where there would exist a harmonious relationship with the customers. At the very first stage, this model should represent a correct brand identity by answering the customers’ question ‘Who are you?’. The aim is to develop an identification of the respective brand and display an association with the respective product class or the specific requirements. The initial stage involves of the brand building block ‘salience’. The next step considers the question ‘What are you?’. The question is answered through the establishment of brand meaning in their minds and associating the brand with certain properties. In this step, there are two brand building blocks: performance and imagery.

The following step is ‘brand response’, whereas the appropriate customer responses to the brand identification and meaning are brought out. This step is also achieved with two building blocks judgement and feelings and answers the question- What about you? The final step in the model is ‘brand relationships’ where the brand response is transformed to a passionate, active loyalty relationship between the customers and the brand. This stage addresses the customer question -What about you and me? The final brand building block is ‘resonance’ which is at the apex of the pyramid.

“Keller’s conceptual framework provides guidance in building, measuring and managing brand equity. While Keller claims that the model can be applied in a B2B context and a consumer environment, it does not appear to have been tested for industrial brands. The similarities and differences between business and consumer markets have long been debated with organisational buyers found to differ in many ways, suggesting that the application of such a model in a B2B setting will pose challenges” (Kuhn & Alpert, n.d., p.3).

Today, there has been a considerable shift in the brand management processes. Concerning with the brand management process, Aaker and Joachmisthaler have discussed the traditional branding model where the brand management team would be responsible for creating and coordinating with the brand’s management programs (Guzman, n.d.). In such a case, the brand manager was not at the top of the management hierarchy and his focus used to be the short term financial results of both the brands and products in the respective markets. The basic objective has been the coordination with the manufacturing and sales departments. The coordination is necessary in order to solve any problem associated with sales and market share. According to this strategy, the responsibility of the brand has solely been the concern of the marketing department. In general, majority of the companies thought that focusing on the latest advertising campaign would mean concentrating on the brand itself. The model is strategically significant and reactive rather than being creative and visionary. The brand has always been referred to as more like a series of tactics and never like any strategy.

In 1997, Kapferer has mentioned that before the 1980’s, a different approach was there towards the brands (Kapferer, 1997, p.23). Earlier, the organizations wished to purchase a producer of pasta and chocolate. After 1980, the consumers are looking for Buitoni and KitKat. Such an instance displays the fact that earlier, the consumers were not bothered about the brands; rather they were more focused on the required product. However, after 1980, the consumers are aware of the product names. Buitoni has established the brand name in pasta and KitKat has marked its position in the world of chocolate. This distinction is quite significant. In the first case, the organizations wish to purchase the production capacity and in the later years, they want to create a place in the consumers’ minds. In other words, the shift in the focus towards the brand would start as it was understood that the brands are more than plain identifiers. According to Kapferer, a brand serves eight functions: Identification, Practicality, Guarantee, Optimization, Characterization, Continuity, Hedonistic and Ethical. Identification of the brand would enable the consumer to clearly see, make sense of the offer and to quickly identify the required after products (Kapferer, 1997, p.29). Practicality would enable the consumers to save on time and energy through identical purchasing and loyalty. Among the other function, optimization is significant one to make the customers sure of finding the same quality indifferent to the time and place of the product or service. The characterization in brand management reflects the confirmation of the product or service image, presented to others. There must be continuity in the brand which is supposed to bring in satisfaction through familiarity and intimacy with the brands, which were used or consumed by the customers since a long period. The brand is supposed to bring in satisfaction linked to the brand attractiveness; the brand is required to be hedonistic. The brand is also required to be ethical as satisfaction of the consumers must come through reasonable behavior of the products and those must be reflected in its relationship towards the society. Among these eight functions, the first two are quite mechanical and are concerned with the essence of the respective brands. The brands are expected “to function as recognized symbol to facilitate choice and to gain time” (Guzman, n.d., p.2). The next steps are meant for reducing the apparent risk and the final three steps are related with the pleasure side of any brand. The brand value emerges from its ability to attain an exclusive, positive and significant mark in the minds of a large customer base. As a consequence, the organizations must carry out branding and brand building to develop the brand value. He has perceived the brand value to be in monetary terms and accounted the same in the intangible assets. However, according to Doyle, brands fail to explore the value creating opportunities if the managers pursue strategies, not oriented to maximize the shareholders’ value (Guzman, n.d.). There are four factors which could be there in the consumers’ minds and which could be combined to establish the perceived value of any product or service brand. This would also determine the “brand awareness; the level of perceived quality compared to competitors; the level of confidence, of significance, of empathy, of liking; and the richness and attractiveness of the images conjured up by the brand” (Guzman, n.d.).

According to the theory by Kapferer, adding brand image, perceived quality, evocations, familiarity to the brand awareness would create the brand assets which can also be thought as the brand added value perceived by the customers (Kapferer, 1997, p.123). Deducting both cost of branding and cost of invested capital from the same would be equal to the finance value of the brand or brand equity value.

Brand Identity

‘Identity’ is very significant for any individual or for any entity to make others feel its presence. In case of marketing, it is very necessary to remain in the mind of target consumers and in the market. It is very important for any business organisation to create a unique identity in market and this identity is very crucial for generating sales revenue. The business organisations or companies can develop identity as per its corporate name, product or services. There are some examples of such identity. Xerox Corporation is a world renowned company that offers printers, copiers, scanners, projectors etc. The company was very successful for its photocopier machines. It used it corporate brand name for marketing the photocopier machines and now, the photocopier machines are now famous as ‘Xerox Machines’. Another famous example of developing identity using product name is ‘Marlboro Cigarette’. It is the world’s largest selling cigarette brand manufactured by Altria Group & Philip Morris International. The company’s corporate identity is not so popular but it is popular for its product identity i.e. Marlboro. However, the above examples have been explained to make understand the importance of identity for being successful in market and for being famous among the target consumers groups. Therefore, every company must try to build its unique identity though its corporate name, product or services. Each product or services and each company have its own unique identity and consumers’ perceptions for each identity are different from other competing product. For example, consumers perceive Mercedes as premium brand as it offers its premium cars to very niche market. On the other hand, Wal-Mart is perceived as low-cost brand as it offers ‘every day low price’ to its consumers (Talley, 2011). Both the companies (Mercedes and Wal-Mart) have developed their own typical identity as per their core marketing approaches.

The above discussion has focused on importance and some example of identity. In marketing this identity is known as ‘brand identity’. Different scholars and critics have presented their views regarding brand identity and how it is important for companies for their sustainability in a market. In this respect, Jean-Noël Kapferer has related the brand identity with globalisation. He has offered the definition of brand identity from the globalization perspectives. He believes that brand identity must help a company in globalising of its brand image. He has explained that “the brand must have as identity that will serve as medium for its globalisation, in both tangible and intangible terms” (Kapferer, 2008, p.488). Sometimes, brand identity and brand image is considered to be similar or identical but these two terms are very different from others. The brand image of company or of a product can be defined through the others perception i.e. consumers’ view; whereas, brand identity is a company’s attempt to project itself before its target consumers (Wilson and Blumenthal, 2008, p.58). Therefore, it can be defined that brand image is an outcome of an attempt to develop brand identity among the consumers groups. Hence, building brand identity is very crucial step for buildings brand image. In the process of framing brand strategy, establishment of brand identity is the foremost task for a company as it offers a company purpose, aim, direction and proper significance to a brand. In order to explain a brand identity, Aaker has identified three prime components in a brand identity. The following diagram shows these three components.

As per the above figure, three essentials of brand identity are core identity, brand essence and extended identity. The core identity refers to the “timeless center of the brand” that must consist of basic features of a company like its values, ethics, belief etc (Salver, 2009, p.41). Brand essence can be defined as soul of a company’s brand that makes the core brand more comprehensible, accessible and valuable. The extended brand helps to add more value to the core brand’s identity. These three components are not basic integral part of a brand strategy but understanding of brand identity helps brand managers in recognising the prevailing brand position (Salver, 2009, p.41).

Toyota has attempted to develop its brand identity for each of its brand product like Lexus, Prius, Innova, Corolla etc. The brand identity is basically determined by specific features of the product. For example, Toyota Prius has been able to develop its brand identity among the tech-savvy and environmentally conscious people and Lexus had gained its specific brand identity among the luxury car market. Lexus has been a premium brand for its target consumers as they perceive Lexus as high quality and value added vehicle. Toyota has successfully understood the core brand identifies and brand essence, and it has promoted its distinct brand products in accordance to target market (Toyota-h, 2011).

Brand Building

To establish the strong brands in a cheaper, better and faster way, the organisations require pursuing a different, effective and efficient approach altogether to the brand building. The cornerstone of the brand building is the fusion of future economics, organisational capabilities and customer insights. Brand building demands the organisations to focus more on the segments which would drive the organisation develop organisation propositions and deliver products according to the customers’ preferences (McKinsey& Company, n.d., p.12).

Brand Awareness

In the above sections of literature review, the importance and explanation of brand image have been discussed. However, without proper understandings of brand identity and brand awareness, the brand image cannot be formed for target market. A company can build a higher brand image in the mind of consumers when it is able to successfully create its pre-determined brand identity through brand awareness programs. Therefore, the importance and understanding of brand awareness is significant in brand image building process. For building a strong brand, it is necessary to incorporate brand identity and brand awareness. The following model shows the importance and correlation between brand identity, brand awareness and brand image.

The above model shows that in the process of brand building, brand identity and brand awareness are the two primary areas followed by brand image & association, brand quality, brand loyalty and brand broadening.

As per the above figure, brand loyalty is an outcome of brand image that is an effect of successful creation of brand identity and brand awareness. Brand loyalty provides a company a competitive advantage over its key competitors that helps it to counter and avoid unnecessary competition. Brand loyalty can be defined from the availability of brand loyal consumers. However, Knox and Walker has identified that there is significant difference between brand loyalty and repetitive purchasing (Ranchhod and Marandi, 2007, p.80). They explained that “this lack of clarity has led to a great deal of difficulty in interpreting many of the brand loyalty studies” (Ranchhod and Marandi, 2007, p.80). However, they also admitted that brand loyalty also includes the repetitive purchasing and word-of-mouth marketing from consumers’ end. Therefore in order to develop significant amount consumers, plausible brand awareness programs are inevitable for a company.

Brand awareness defines the strength of a brand in a consumer’s mind, and a strong effect of brand awareness determines the longevity of brand’s image in target consumers’ mind. According to Keller, brand awareness includes performance of brand recall and brand recognition. Bran recall refers to consumers’ ability to regain a brand from their past experiences while making any buying decision. Brand recognition is consumers’ knowledge regarding a specific brand. The consumer should be able to recognise their brand when they are given wide ranges of choices. McLoughlin and Aaker have been able to understand major draw backs in implementing brand awareness programs for a company. They believe that, most of the companies consider brand awareness as a promotional mix and hence, they more focuses on promoting a product rather than brand development or brand awareness. Brand awareness is also very necessary for creating brand equity. McLoughlin and Aaker have designed a model showing brand awareness and its important outcomes.

As per the above figure, brand awareness is directly related to brand equity which includes brand related assets and liabilities. Successful implementation of brand awareness and better brand equity lead to develop higher brand loyalty and brand association of consumers.

While discussing about the brand awareness, it is necessary to deal with the consumers’ buying behaviours. Brand awareness deals with consumers’ perception for an offered brand that helps them in recalling the past experiences while buying. The influences of brand awareness are very substantial in the process of making a buying decision.

Gustafson and Chabot have provided five major steps for planning and implementing brand awareness. These five major steps are given below.

  1. Cleary identify and understand potential target consumers and market
  2. Develop a unique name, slogan, and logo for a company or for offer product brand
  3. Offer value added features and services along with offered branded product or services
  4. Effective promotional mix and advertising focusing on brand creation
  5. Develop proper public relation with consumers by following-up the post-sales period (Gustafson and Chabot, 2007)

The above steps are very helpful in establishing a strong brand awareness programs to build brand image in the mind of target consumers.

Recently, Toyota has faced a drastic brand crisis in its Swedish market due to quality issues. It caused to develop a negative brand image in the mind of target consumers. Moreover, in American market, the company faced a crisis, and mass media played very active role in spreading the ‘Toyota crisis news’. However, due to previous effective brand awareness programs, certain group of loyal consumers were not influenced by that crisis news. This case provides an evidence for the importance of brand awareness creation in the mind of the target consumers. On the other hand, the prevailing management of Toyota was not able to cope up with that crisis situation. In such situation, management could have restructured its entire brand awareness program to maintain its corporate image (Feng, 2010).

Brand Positioning

Brand Positioning can best be described as the process of identifying the niche of the market for a certain brand. This can be assumed as one of the oldest marketing tricks as it was found as early as in 1969. During the start of marketing policies the organizations focused only on the benefits which took them away from competition in the market which may also form differentiation.
When we talk about the term ‘positioning’ we need to realize what it actually means. It can be defined as making a place in the customers’ memory, providing them with reasons or characteristics of brands that would make them choose their brands instead of same brands in the industry from different


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