put yourself in the position of a marketing consultant brought in to Toyota to f
ID: 424083 • Letter: P
Question
put yourself in the position of a marketing consultant brought in to Toyota to formulate a set of well-developed and supported recommendations for moving Toyota’s environmental plan forward. You will be presenting your recommendations to the company’s senior leadership team. Your recommendations should be based on a critical evaluation of the effectiveness of the Global Vision, Principles, and Earth Charter (Links to an external site.)Links to an external site. on its prior marketing strategies. The recommendations should be logically presented, well-supported, and thoroughly vetted.
Explanation / Answer
Recommendations:
Toyota continues to effectively promote its Global Vision, Principles, and Earth Charter, but it is important to carefully monitor programs and initiatives to ensure their social responsibility goals are being achieved.
Remain ahead of the competition. Sales revenue has increased consistently over the past 5 years with gross income more than doubling and net income continuing to climb (MarketWatch, 2017). Increased competition in the automotive industry affords customers more options. Toyota operates 15 research facilities in 8 different countries and expanding research and development can provide Toyota with a competitive edge (Toyota Motor Corporation, 2017). Continue to improve operations and find new ways to innovate while maintaining Global sustainability through the Toyota Environmental Challenge 2050 and social contributions.
Semi-Autonomous Technology
Expanding Research and Development into semi-autonomous technology will allow Toyota to better compete with Tesla, Ford, Nissan, and GM. “In a recent U.S. survey by the Boston Consulting Group, 55 percent of drivers said they would likely buy a partially autonomous car in the next five years” (Durbin, 2015). Self-driving cars are in our future, and it would benefit Toyota to spend its resources on semi-autonomous technology with the intent of eventually being able to offer fully autonomous cars. In August, Ford announced its investment and collaboration on the development of a fully autonomous vehicle with an anticipated commercial operation delivery date of 2021 (Ford, 2016). Ford’s plan is to be a leader in autonomous vehicles and Toyota would benefit from investing in this endeavor. Doing so would fulfill the Guiding Principle of creating and developing advanced technology “that fulfill the needs of customers worldwide” (Toyota, 2015).
Fuel Cell Technology
Two fuel cell fork lifts are currently being used at the Motomachi Plant located in Japan, with expansion expected to reach 170-180 units by 2020 (Toyota Discussion, 2017). Toyota’s fuel cell operated forklifts “utilize hydrogen to generate electricity” and “have excellent environmental performance as they do not emit CO2 or substances of concern (SOCs) during operation” (Toyota Discussion, 2017). Toyota’s expansion into these industrial vehicles is an opportunity for additional sales and increased production will further bolster their green initiative. The utilization in additional manufacturing/industrial facilities, in and outside of Japan, as well as strategic partnership opportunities with companies who utilize fork-lifts is extensive.
Expand into Plug-In Hybrid Market
In March 2016, Toyota dominated with 74% market share in U.S. Hybrid Sales compared to only 0.13% of U.S. Plug-in Hybrid sales with the sale of its Prius Plug-In (Cobb, 2016). Considering that the energy savings associated with plug-in hybrids are more substantial than traditional hybrids, Toyota needs to invest its research and development into the more efficient plug-in hybrids. In fact, according to Mark Hovis (2016), the “Toyota Prius hybrid HEV would have to drive 242 miles before overtaking the Chevy Volt plug in hybrid in fuel efficiency” and is “always less efficient inside 100 miles” (Hovis, 2016). Total PHEV sales are constantly surpassing traditional hybrid sales, and Toyota needs to develop additional plug-in options to gain traction.
Furthermore, it would be effective to offer “plug-in” locations at the Various National Parks that are currently a part of Toyota’s Partnership Strategy. Some parks received donated hybrids, but it would be an effective marketing strategy to trade-in these vehicles (or expand to additional parks) with Plug-in Electric Vehicles considering their growing popularity. “National Park officials are not aware of any procedures or plans for coordinating, handling, or serving multiple guests who need to charge battery-electric vehicles” (Parrott, 2014). With the growth of Electric Vehicles increasing by 60% each year, it is imperative that plug-in locations become more readily available. Meeting with National Park officials and/or partnering with a provider of public stations to ensure a wider distribution will encourage sales of these vehicles.
Solar Power
Partner with a Solar Power Company to offer in-home solar panel installation, along with a home charging station that consumers would use to power their Toyota hybrid. Ezra Dyer conducted a study in 2016 trying to power three electric vehicles with only his solar panels (2016). He used his panels as a private gas station, paying $0 per gallon, and all three vehicles passed the test (although his normal routine covers a relatively small range) (Dyer, 2016). Focusing on Solar Power installations for home-use with vehicles like these is an opportunity that Toyota cannot miss. Offering consumers a discount on their solar panel installation (paid for by Toyota) would not only encourage sales but Toyota’s contribution to environmental improvements on a societal level as well.
Focus Marketing in Specific Geographic Segments
Green initiatives are more popular in specific geographic segments (and in some cases regulated). California, for example, has extensive state-regulated fuel-economy requirements which Toyota’s zero-emission Mirai satisfies (Reuters, 2016). As “hydrogen stations are nearly impossible to find outside of Los Angeles or San Francisco”, these cities are an ideal marketing location for this hydrogen fuel-cell sedan (Reuters, 2016).
These cities would also prove to be a critical U.S. launching point for the Toyota Fuel Cell Bus. Just last month, Toyota delivered a fuel cell bus to the Tokyo Metropolitan Government with plans to reach 100 fuel cell buses by 2020 (Toyota Global, 2017). With a hydrogen refueling network on the horizon in California, 2248 Metropolitan buses in Los Angeles (Metro, 2016), and 827 buses in San Francisco (Nolan & Reiskin, 2016) – Toyota’s expansion of these Fuel Cell buses into the Unites States is prudent.
Offer Less-Expensive Base Models
Although Toyota’s Highlander Hybrid has been ranked #1 in Midsize SUVs and #3 in Hybrid and Electric SUVs, its price-point may drive customers away. Reducing one’s carbon footprint has proven to be an important aspect in some consumer’s purchasing decisions – but overall cost will prove to be inherently problematic for this Toyota model. The Highlander Hybrid costs $5,600 more than its gas-only counterpart and will only save approximately $350 each year in fuel (Shelton, 2017). Unless carbon footprint reduction is the top priority for the consumer, it is likely that most shoppers will continue to purchase the standard gas-only Highlander for cost-effectiveness.
“In the U.S., a solid majority believe there is evidence that global warming is happening, but they do not rank global climate change as one of the top threats facing the country” (Motel, 2014). This “skepticism” is evident in consumers’ purchasing habits. In 2015, approximately 17.5 million cars were sold in the United States (Phillips, 2016). Of that 17.5 million, only 384,417 of the vehicles sold were hybrid vehicles (Statista, 2017). However, the market for electric vehicles continues to grow. It is currently growing 60% every year, but Carbon Tracker anticipates that these electric vehicles will only become less expensive than their gas counterparts starting in 2020 (Scott, 2017). Offering less-expensive base models earlier and increasing R&D into plug-in hybrids will allow Toyota to grab much of that consumer base.
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