marketing+communications+plan+-+prius+-+rebecca+rogoschewsky

7/25/2019 Marketing+Communications+Plan+-+Prius+-+Rebecca+Rogoschewsky

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Marketing Plan: Toyota Prius

Rebecca Rogoschewsky

Johns Hopkins University


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MARKETING PLAN FOR TOYOTA PRIUS IN NORTH AMERICA 1

Section 1: Current Marketing Situation

Toyota is a Japanese automaker known for efficient and reliable vehicles. Most car

manufacturers were impacted by a declining economy throughout the last decade; however,

Toyota fared better than many of its competitors. The company was impacted by natural

disasters throughout 2011 that caused serious disruptions in the supply chain and limited access

to numerous parts (Kageyama, 2013), and throughout a number of years before that, struggled

with scrutiny over millions of vehicle recalls in the United States, due to issues such as defective

floor mats, gas pedals, and brakes. While these events no doubt impacted Toyota s reputation,

the Japanese automaker sold 9.748 million vehicles and was the best-selling automaker in 2012(Kageyama, 2013). The company is planning to use the reputation it built for green technology

with the Prius to help rebuild its brand (Kageyama, 2012).

The Toyota Prius, launched in 1997, was one of the first hybrid vehicles to be offered to

consumers (Halliday, 2008). Prius annual sales have grown to more than $1 million, which

makes up 10% of Toyotas sales worldwide (Kageyama, 2012). Toyotas plan for market growth

includes successful sales of hybrid offerings (Greimel, 2011) by increasing hybrid sales to 1.2

million cars per year by 2015. In North America alone, in 2010, Toyota sold 195,882 hybrids, of

which 143,890 were Priuses. In 2012, 236,000 Priuses were sold in the US alone, an increase of

73% over 2011.

Competition is a risk for the Prius, as more automakers begin to offer hybrid options. Job

(2012) suggests that the Ford C-Max will be a serious contender against the Prius, has better fuel

economy than the 2012 Prius v and the 2012 Honda Civic Hybrid, and has a roomy, stylish, and

smart design. However, the Consumer Reports publication (2013) refers to the Prius as a

bargain. While it is not the cheapest car in its class, it is spacious, reliable, and economical.


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Market Description

While the initial excitement around electric and plug-in vehicles has waned (Guilford,

2013), hybrids are still a focus of many automakers, including Toyota. Guilford (2013) also

provides further insight into the market through interviews with those in the auto marketing

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, beforeexpanding 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:

First-time Prius

customers

A technologically advanced,high-performance, fun to drive

vehicle that is fuel efficient,

has a sleek design, and is

Numerous upgradesand options to choose

from, four model types

to meet various needs,


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customizable to individual

needs.

High safety rating.

unbeatable gas mileage,

and a new lower price.

Various safety features,

including extra airbags

and a high safety rating

for its class.

Customer B:

Current Toyota

customer looking for

a hybrid model

A current Toyota customer

will already enjoy fuel

efficiency and reliability. These customers, if looking to

try the hybrid, would be

looking for increased fuel-

efficiency, lower emissions,

sleek new styles and colors,

fun new technology and some

type of incentive to but a

hybrid.

Has the reputation of

the trusted Toyota

brand, with the addition

of increased fuel

economy and

trendsetting, sleek style.

New lower prices and

lower fuel costs means

less risk in switching.

Rebates for fuel

efficient vehicles.

Customer C:

Current Prius

customer

This customer may be a first-

generation hybrid model owner

looking for an upgrade.

This group needs to see the

benefits of the newer models,

including new available

Great service and

perhaps some type of

trade-in incentive for

older models.

Same great vehicle with

better prices and


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vehicle options, updated

models and colors to choose

from, and the same great fuel

efficiency for a new lower

price.

Customers need to feel valued

in order to buy another Prius or

upgrade their existing car.

updated design.

New Plug-In model for

those who were early

adopters of the first

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 Toyota s 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


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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.

Channels and Logistics Review

The Toyota Prius will be distributed through the 1,500 Toyota dealerships throughout the United

States (Toyota, n.d.).

Section 2: Strengths, Weaknesses, Opportunities, and Threats Analysis

Toyota is a well-respected brand in the auto industry and the Prius was, as the tagline states,

The one that started it all. However, some of the initial hype around hybrids has waned.

Strengths:

The first hybrid on the market; the one that started it all.


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Reputation of being a trailblazer in the hybrid industry.

Best fuel efficiency of all comparable hybrid models.

High safety ratings.

High-tech options in each version of the Prius.

Spacious interior and choice of size due to four model offerings.

Toyota has a proven track record, and was the worlds top automaker of 2012.

Weaknesses:

Reputation for a significantly higher price than non-hybrid vehicles.

Slightly higher priced than other comparable hybrids.

Fuel economy can vary greatly depending on how the vehicle is driven.

Perceived premium cost.

Opportunities:

New model style options can appeal to new target audiences, such as families and

younger consumers.

Climate change continues to be a growing concern.

Gas prices remain high and somewhat volatile in North America, increasing the appeal of

fuel efficient vehicles.

Consumers still cautious in terms of spending, but this might be an opportunity to

highlight lower prices and newer model options.

Threats:

Increased competition, especially from North American automakers in the North

American markets.


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Impact of economic downturn is still evident in more cautious consumer spending

patterns.

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 WEAKNESSES

OPPORTUNITIES Continue to position Prius as

a trailblazer among hybrids.

Focus on Toyotas strong

reputation and brand.

Build on well-known facts

such as fuel efficiency and

safety rating.

Build on already positive

media coverage with

proactive media plan.

Reposition Prius in terms

of its new lower cost.

Educate customers on how

to get the best fuel

mileage upon purchase, to

manage the expectations

of customers.

THREATS Position Toyota as an

innovative automaker and

Build on new vehicle

safety ratings to prevent


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take advantage of the fact that

newer North American

hybrids may not have the

reputation that Toyota does.

Maintain market share of

hybrids by targeting first

generation Prius customers

and other Toyota owners for

new sales.

customers from being

wary as a result of recent

vehicle and parts recalls.

Focus on value to

customers to ensure that

the slightly higher price is

seen as worth the value

due to higher fuel mileage

and proven track record of

high-quality vehicles.

Section 3: Marketing Strategy

Positioning

Differentiate the Prius from other new brands of hybrids by continuing to brand it as the

original hybrid. This positions the model as a leader in the hybrid market. The new model

offerings in the Prius line of vehicles allow the hybrid to appeal to a wider variety of consumers.

The marketing communications campaign will focus on the vehicles innovative fuel technology,

new lower pricing, and style options to fit any lifestyle.

Product Strategy

Toyota is now rolling out three new models of the Prius vehicle, including a new Plug-In

model. Each model and its marketing will be aligned with its respective target market. New

models will be tested by Toyota employees and employees within the distribution network. The


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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


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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 ar ent likely to buy a vehicle

more often than every four or five years.


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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 veh icle 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

Contact

Importance

Evaluation

Impression

Evaluation

Customer

Expectation

Customer

Experience

Message Sent Resources

currently

allocated

Dealership

sales teams

High Mixed Excellent,

honest service

Consistent

with other

dealerships

We appreciate

your sales, and

know our

reputation will

bring more

Adequate

Dealership

Service

Centres

Medium Mixed Quick, cost-

effective

service from

expert staff

Varies

depending on

the

dealership

Depends. Good

service suggests

that they are

proud of brand

Could usemore to

ensure

consistency


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Company

reputation

High Positive Positive

reputation for

great service,

quality and

value

Low-

maintenance,

good value

for product

and

consumers

can have

confidence in

their

purchase

Buying a Toyota

is a good choice,

and a Prius is a

great option for

certain

audiences

Could be

improved

following

recalls in

2009-2010

Advertising Medium Positive Realistic,

honest

information

about how

product will

meet customer

needs

Depends.

Effective if it

reflects

messages at

other brand

contacts

The company

has information

to share

Could be

used to better

promote new

line of Prius

models

Media Medium Positive Unbiased

information

and coverage

of products and

company

Customers

depend on

the media for

honest

feedback on

products

If unbiased

reporters say its

a good car, it

must be a good

car

Adequate

positive

coverage


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Employees High Mixed Employees

should be

brand

advocates and

speak

positively of

the product

Employee

stories are

trustworthy

and

important

If employees are

happy, its likely

a good company

Could better

use

employees as

brand

ambassadors

Word of

mouth

High Positive Honest

feedback from

friends and

other trusted

consumers

Most Toyota

customers are

happy and

tell their

peers

Word of mouth

is trustworthy

information.

Positive, but

could always

improve

Website Medium Positive Easy-to-access

information

Easy to

navigate and

find

information

Provides tone

and feel of a

vehicle - Prius

site is fun, crisp,

and modern

Adequate

Social

media

High Mixed Honest,

unfiltered

feedback

Mixed

reviews

Company is

responsive and

modern

Not enough

Community

Investment

Medium Positive Companies

should also be

responsible

corporate

citizens

Help create a

positive

feeling

towards a

company

The company

cares about the

communities it

serves

Already do a

great job

built on this

and tie to

incentives


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Table 3.2 Whole Brand Contact Priority Grid

Important

Negative 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.

ISocial media

Dealership sales teamsCompany reputation

IIWord of Mouth

EmployeesMedia

IIIDealership Service Centres

IVWebsite

Advertising


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Word of Mouth/Social Media Campaign

A social media campaign will be developed to complement an advertising campaign.

The social media campaign will launch with teaser Twitter and Facebook posts, as well as

Instagram photos of the new models new features. Following three weeks of teasers, employees

will be encouraged to share their experiences, photos and favourite features of the new models.

This campaign will last three weeks as well, and the last week will be coordinated with the

launch week of the new models. For the first month of sales, the social media campaign will

continue with employee stories, at which point contests will be launched to entice customers to

share their stories as well, to be entered to win free car washes or even trips to locations such as

Costa Rica or other countries where rainforests are protected. These types of incentives are well-

aligned with the product, as taking care of a new vehicle is important, and as environmentally-

aware consumers may be attracted to the Prius for its environmental benefits, a trip incentive to

this type of location may be an effective for this audience.

Media and Community Investment Strategy

Both Toyota and Prius already have positive media coverage, since being named the

number one automaker of last year and the best-selling hybrid, respectively, and have recovered

from some of the negative press as a result of product recalls within the past five years. While

theres much positive press regarding the reputation of the vehicles and sales, a media campaign

highlighting increased sponsorships could help position Toyota as a good corporate citizen.Toyotas investment guidelines suggest that they focus on environment, education and safety,

which are well-aligned with product offerings. Investments in parks, community clean-up days

(based in schools and communities), and sponsorship of energy efficient community complexes


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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.


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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 evaluationthroughout 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.


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Table 4.1 Return on Customer Investment

AggregatedCustomer

Group

Group A:First Time

Prius Buyer

Group B:Switchersfrom other

Toyota model

Group C:PreviousPrius

customersBehavioral Goal Increase Increase Maintain

Category Requirement Assumptions

1 Estimated Category Demand 7800000000 390000000 195000000 195000000

Base Income Flow Assumptions

2 Base share of requirement % 60.00% 20.00% 20.00%3 Base income flow to us $ 234000000 39000000 39000000

4 Noncommunication costs % 70.00% 55.00% 65.00%5 Contribution Margin % 30.00% 45.00% 35.00%6 Contribution Margin $ $ 70200000 17550000 13650000

Scenario A: No CommunicationsInvestment

7 Change in share of requirement positive or negative % 20.00% -30.00% -5.00%8 Resulting share of requirement % 72.0% 14.0% 19.0%

9 Resulting customer inflow to us $ 280800000 27300000 37050000

10 Less noncommunication costs -196560000 -15015000 -2408250011 Less marketing communication costs -$ 0 0 0

12 Net contribution $ 84240000 12285000 12967500

Scenario B: Communication Investment

13 TV Advertising $ 500000 50000 2000014 Radio Advertising $ 100000 5000 015 Consumer Magazines $ 300000 25000 0

16 Direct Mail $ 500000 250000 50000017 Sales Promotion $ 250000 50000 5000018 Public Relations $ 100000 50000 3500019 Special events/sponsorships $ 1000000 200000 1500020 Custom Media $ 250000 50000 021 Customer Service Improvements $ 200000 200000 20000022 Total Br and Communi cations Investment $ 3200000 880000 82000023 Change in the share of requirement Estimate % 36.00% 0.00% 15.00%24 Resulting share of requirement % 81.6% 20.0% 23.0%25 Resulting customer income flow to us $ 318240000 39000000 44850000

26 Less noncommunication cost $ 222768000 21450000 29152500

27 Less brand communication cost $ 3200000 880000 82000028 Net contribution $ 92272000 16670000 14877500

ROCI Calculation

29 Net contribution scenario A 84240000 12285000 12967500

30 Net contribution scenario B 92272000 16670000 14877500

31Incremental gain/loss v. No investmentscenario 8032000 4385000 1910000

32 Incremental ROCI 39.84% 20.07% 42.93%


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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 aloss 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


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target audiences, it is evident that the $4.9 million marcom investment will result in an additional

$14.3 million in revenue for Prius.


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