Toyota: Driving The Mainstream Market To Purchase Hybrid Electric Vehicles

TOYOTA
Driving the Mainstream Market to Purchase Hybrid Electric Vehicles

How To Develop Consumer Attitude
& Purchase Intent To Get Consumer’s Acceptance?
The Automobile Industry and Market
• 1960s
the auto industry has undergone a dramatic transformation.
• 1965
import manufacturers held slightly more than 5% of the US market share
(exhibit 1)
• 2001
The environmental concern about global warming and the fear of US
dependence on foreign oil.
• The technology for engine components is evolving towards cleaner, more
efficient cars. The gasoline-combustion engine will not meet future
environmental demands.
(cont’d)
• New and different technologies that will change the way people travel in
the future.
• By 2003, the industry changed and developed from the Model T to clunky,
fuel-guzzling muscle cars to the fuel-efficient small cars of the 70s and 80s
to the sport utility vehicles (SUV) of today.
• So, the automobile industry overview:
ENVIRONMENTAL CLEANER & MORE FUEL-EFFICIENT

The Company: Toyota Motor Company
The Toyota Motor Company was first established as a spin-off from Toyoda
Automatic Loom Works, a leading manufacturer of loom machines.
Headed by Sakichi Toyoda, who sold the patent rights to one of his loom
machines in 1973.
In 1957, Toyota made the first move into the American market, with
introduction of the Toyopet Crown. But it Failed!!
New Technologies
• new technologies  satisfy customer’s needs + meet the stringent
environmental legislation of the future
• new technologies  provided an opportunity for the manufacturers to
reinvent & revitalize the auto industry with a disruptive technology  win
market share & revenues
• new technologies :
 fuel-cell technology
 pure electric vehicle (EV)
 hybrid-electric vehicle (HEV)
… tonight, I’m proposing $1.2 billion in research funding so

that America can lead the world in developing clean,
hydrogen-powered automobiles … George Bush
US President
Fuel-cell technologies
• an electrochemical energy
conversion device that
converts H2 and O2 into H2O,
producing electricity & heat
• works like battery 

can be re-charged while drawing
power from it
• engine is water  eliminating

all pollutants from the process
“fuel-cell technology had a long way to go”
it challenges with reliability & durability, power output, cost-efficiency and the
ability for the manufacturers to mass-produce
pure electric vehicle (EV)
EVs  cars that run on a battery and

as results they have ZERO tail pipe
emissions
Though many manufacturers sold

& leased EVs but many of them
have been discontinued
The limitation of EVs are :

lack of power, long charger times, cold weather
issues & challenges with the existing
infrastructure (NO standard re-charging system)
hybrid electric vehicle (HEV)
Hybrid :
an electric motor + gas or diesel-powered engine
= increased fuel-efficiency & lower emission
What BEST ?
 better gas mileage
 NO obstacles with extreme weather
condition
MIT study found :  NOT require any infrastructure changes
hybrid tech is BETTER for the environment !
use less fuel & emit less CO2 than fuel-cell models over the vehicle
lifetime
Toyota’s Competitive Advantage
Toyota’s Hybrid Technology
The 2004 Toyota Prius :

 5-passenger sedan
 could reach speeds up to 100
miles/hour
 achieve 0 to 60 mph in 12 sec
 featured HSD  more power,
more comfort
Toyota’s Hybrid Technology
2003 Estima introduced in Japan
2005 Lexus RX330 Hybrid Sport Utility introduced
2005 300,000 Toyota Hybrid vehicles sold in the US
2012 ALL Toyota vehicles in US available with hybrid
technology
Toyota’s Planning
CHALLENGES : The Servicing of the Vehicles !
few independent garages serviced HEVs, however, as HEVs evolved into a
mainstream product then more facilities would be equipped to manage and
service hybrid technology
PLANNING : Fulfilled hybrid-electric service needs !

 preparing & training its service technicians at all dealership in servicing the
Toyota HEV models
 promised that every Toyota car, truck & SUV was covered by limited
warranty coverage (included Prius hybrid related components)
The Competition
General Motors, Ford, and
DaimlerChrysler Toyota
Focused on
Mergers and acquisition to Business strategy on

provide their companies with the technological innovation,
resources to be able to compete research and new product
in the global marketplace development
Honda is the strongest competitive threat to Toyota
because it produce two HEVs and had the ability to adopt the
technology into its manufacturing plans
But Honda don’t have any plans to add more gasoline electric
Evs to its product line, because the company did not want to
sacrifice short-term profit
As result, Honda’s product plans did not include aggressive

pursuit of disruptive HEV technology, rather it planned to
maintain its leadership in the segment to meet short-term
profit goals,
Ford introduce the first SUV HEV, the Ford Escape in
2005
General Motor introduce a Saturn SUV and a Chevrolet full-size,
pickup truck in 2004  the strategy focused on selling a more fuel-
efficient, full-powered pickup with a mild hybrid engine in large market
segment
Plan for new group of HEV is “band-aid” approach 

developing hybrid technology to stay competitive, but not
integrating technology into the development of all new vehicle
The other manufacturers were hoping the hybrid vehicle would continue to be a
niche market, and would not required by regulation or by consumers in the next
decade
Toyota’s Challenge:
Moving Up the Bell Curve
The challenge:
develop a strategy to turn the hybrid technology from a niche market product and
evolve it into mainstream acceptance.
To “move up the bell curve” required creating awareness about the product and
building a strategic advantage over traditional cars and trucks
Toyota plan to give customers what they wanted : a vehicle that had the traditional
styling and performance attributes of today’s cars with environmental, efficiency
benefit of the car of the future
Advertising and Marketing
The Prius had a fully integrated marketing plan with an emphasis on Internet and
Web advertising
The initial strategy targeted “early adopters” by showcasing the intelligence of the
new technology in a Web-based marketing campaign
The initial strategy targeted “early adopters” by showcasing the intelligence of the
new technology in a Web-based marketing campaign
The initial “buzz” -Early dialogue with interested customers

- The Web-based communication
No
Favor Oppose Total
Ways to Deal with the Energy situatiom Opinion
(%) (%) (%) (%)
Investment in new sources 91 6 3 100

Mandating more energy efficient app 87 12 1 100
Mandating more energy-efficient new 86 12 2 100
buildings
Mandating more energy-efficient cars 85 14 1 100
Investing in power gen. plants 83 13 4 100

Fed gov partnership 76 22 2 100
Investing in more electrical transmission 69 23 8 100
lines
Investing in more gas pipelines 64 29 7 100
Drilling for natural gas on federal lands 63 33 4 100
Increasing the use of nuclear power 48 44 8 100
Opening up the Alaskan W. R 38 57 5 100
Potential Customers survey
• 90% would consider buying a hybrid version of current vehicle
• 75 % ‘somewhat to very informed’
• Average buyer was a fairly well-off, educated, baby boomer
TERIMA KASIH

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How has the automobile industry changed over time?

How has the automobile industry changed over time?

What new technologies are discussed for improving fuel efficiency and reducing emissions?

What new technologies are discussed for improving fuel efficiency and reducing emissions?

TOYOTA

Driving the Mainstream Market to Purchase Hybrid Electric Vehicles

ENVIRONMENTAL CLEANER & MORE FUEL-EFFICIENT

… tonight, I’m proposing $1.2 billion in research funding so

• works like battery 

• engine is water  eliminating

EVs  cars that run on a battery and

Though many manufacturers sold

The limitation of EVs are :

The 2004 Toyota Prius :

PLANNING : Fulfilled hybrid-electric service needs !

Mergers and acquisition to Business strategy on

As result, Honda’s product plans did not include aggressive

Plan for new group of HEV is “band-aid” approach 

The initial “buzz” -Early dialogue with interested customers

Investment in new sources 91 6 3 100

Investing in power gen. plants 83 13 4 100

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