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Integrated Marketing Communications Strategy
Launching the Prius Diesel into the UK market
while establishing awareness of Toyota as an environmentally friendly performance brand
Macro analysis of the Automobile Industry and
Micro analysis of Toyota
Martin David Beauchamp 01076684 MA Marketing Communications 4MMC7A5 IMC Campaign Planning 2005/6 (full time) Westminster Business School Date of submission: 31/09/2006 Supervisor: Andrew Reeve
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Acknowledgements
I would like to thank everyone who has influenced my life and therefore my work. With special
thanks to all those who have helped me to keep my sanity through this thesis and the last year.
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Abstract
This report analyses the automotive industry paying particular attention to the UK marketplace.
Furthermore, Toyota will be critically evaluated on the basis that it will be the host company from which
the new vehicle will be launched into the UK market. However, the global market will be analysed in
order to ascertain current issues, as these will ultimately impact on the UK market. Additionally, the
proposed new product will have to be sold in markets other than the UK as to recoup the cost of
development, thus the importance of understanding the international market.
After the analysis is made the report will continue to outline a market entry strategy using a
comprehensive integrated marketing communications plan that will ensure a successful launch whilst
achieving other synergistic effects on the Toyota brand. The launch campaign will attributed a budget of
£12.5 million and this is expected to achieve a revenue of in excess £85 million. As the automobile
industry operates with small margins the campaign expenditure is estimated to exceed profitability,
however this can be justified due to raising awareness levels and residual effect the campaign is likely to
have on other models during the campaign and upon the diesel hybrid after the campaigns’ completion.
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Contextual Reading
This project is largely based on data exhumed from: AID Newsletter, Schmidt’s auto publications an industry magazine. Mintel Reports Toyota Annual Report 2005 SMMT and DfI ESMAR: The Positioning of Green Technology Kotler’s Marketing Management text book Mediatel While these sources were instrumental, this project could not have been completed without the countless other sources, which have been used directly or indirectly for contextual reading and broadened the overall value of this thesis.
Methodology
All major marketing models were used to a varying degree in analysing the market place and establishing the communications programme.
Research Sources
This report is heavily dependent on secondary research. The importance of the automobile industry has ensured that it is widely written about and that all facts and figures that are available and of interesting to shareholder are published. A verity of sources were consulted in establish many sections of this report. While researching, one research paper from March 2004 was unearthed. Published in ESMAR and entitled: ‘The Positioning of Green Technology’ (questioning 1,300+ people), this paper presented an insight into the perceptions of hybrid technology in particular for the Toyota Prius. Despite the age of this research it did research many of the finding are still valid and were either observed at the London Motor Show or after informally interviewing a Toyota and Honda representative. The reason for not conducting and independent survey was difficulty of accessing the required numbers in the target demographic to gain statistically valid results. It was also felt that combining the above mentioned research with research conducted by Mintel (2004) into car retailing (based on a universe of 25,000 people) along with the informal interviews and blog/car reviews this would give ample basis in understanding consumers views.
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Executive Summary
The automotive industry is highly competitive with margins continually being squeezed. It is also an
industry that is going through considerable change, where the ‘western’ goliaths are faulting and
suffering financial difficulties. It is their size and number of brands within their portfolio which is
slowing their ability to change as well as the establish unionisation of their workforce. Furthermore,
due to the high fixed cost nature of the business that they must keep the metal moving and thus
offer large discounts to make sales. Japanese manufacturer, Toyota, has radically changed the
industry with efficient production techniques, organic growth and technological advances; they are
now emerging as the world’s largest car producer and one of the most profitable.
As consumers continue to worry about the ever increasing fuel prices they are seeking alternatives.
The Toyota Prius was one of the first cars that offered a genuine satisfactory solution. While
awareness of this technology is still low and misunderstood, that will begin to change as other
manufacturers enter the fray. This report proposes extending the current second generation Prius to
a third more economical Prius being fuelled with diesel or biodiesel where available and will be
named the Prius D3.
This model would be an extension of the range and would take inspiration from Toyota’s business
objective of being and providing ‘greener’ solutions. The target psychographic should find green
technology appealing, however they will be more persuaded by the considerable savings this car can
bring, as will the lucrative leasing/renting/corporate car market.
In launching the Prius D3 into the UK market two key aspects must be noted, first of all the
consumers desire to downgrade cars to smaller and therefore more efficient vehicles and secondly
the scepticism of the ‘new’ hybrid technology from the target AB 35-64 demographic. As such the PR
and DM campaigns have been aimed at establishing awareness and understanding of the concept.
The proposed advertising campaign has tried embracing consumers ‘fear’ both to the monetary and
environmental cost of running a car. For this reason the slogan that will be used to link the entire
campaign together will be ‘Dare to drive’. If consumers test drive the hybrid their initial qualms will
vanish according to research. Furthermore, the message brings home that no longer does driving
have to be about compromising, daring to drive is all about having a car that is big, friendly and
cheap to run.
As a flagship brand that will also increase the publics understanding of the future direction of Toyota
a budget of £12.5 million has been proposed to be spent over a 12 month period. It is estimated
that this will generate sales of 3,759 units or a revenue of £85 million.
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Contents
Acknowledgements ........................................................................................................................................................................ 2
Abstract............................................................................................................................................................................................ 3
Contextual Reading ........................................................................................................................................................................ 4
Methodology.................................................................................................................................................................................... 4
Research Sources ........................................................................................................................................................................... 4
Executive Summary........................................................................................................................................................................ 5
1.0 Macro Environment.................................................................................................................................................................. 9
Figure 1: R&D Expenses as Share of Total Costs & Expenses.......................................................................................... 10
2.0 Globalisation of an industry.................................................................................................................................................. 10
3.0 Market Structure .................................................................................................................................................................... 11
Table 1: Global Sales and Market Share .............................................................................................................................. 11
Table 2: Western Europe, USA and Japan Market share (January – December 2005)................................................. 12
4.0 Competition within the Industry .......................................................................................................................................... 13
5.0 The cars role in society and the changing framework for manufacturers ..................................................................... 14
6.0 UK Market Place ..................................................................................................................................................................... 15
Table 3: United Kingdom – Automobiles Sales ................................................................................................................... 15
7.0 Summation.............................................................................................................................................................................. 16
Table 4: Environment – An Industry overview.................................................................................................................... 17
Micro analysis .......................................................................................................................................................................... 18
8.0 Host Organisation - Toyota .................................................................................................................................................. 18
9.0 Branding and Image.............................................................................................................................................................. 18
Table 5: The Top Global Automotive Brands 2005/06....................................................................................................... 19
10.0 Toyota’s products and price ............................................................................................................................................... 20
11.0 Financial Highlights ............................................................................................................................................................. 21
Table 7: Toyota’s Financial Ratios ........................................................................................................................................ 21
Table 6: Ford and GM’s Financial Ratios .............................................................................................................................. 21
12.0 The Toyota Way .................................................................................................................................................................. 22
13.0 Going Global ......................................................................................................................................................................... 22
14.0 Distribution Network ........................................................................................................................................................... 23
15.0 Main Issues Facing Toyota ................................................................................................................................................. 23
16.0 Conclusion & Recommendation ......................................................................................................................................... 24
Table 7: Diesel car sales in the UK ....................................................................................................................................... 24
17.0 Product information............................................................................................................................................................. 25
17.1 The Product..................................................................................................................................................................... 25
17.2 Product functions and point of difference................................................................................................................... 26
Table 8: Emission levels of existing vehicles ....................................................................................................................... 26
17.3 Price ................................................................................................................................................................................. 27
Table 9: The best selling fleet cars in terms of volume for 2004..................................................................................... 27
18.0 Campaign Mix Performance Objective .............................................................................................................................. 28
18.1 Business Objective ......................................................................................................................................................... 28
18.2 Marketing Objectives ..................................................................................................................................................... 28
18.3 PR objectives................................................................................................................................................................... 28
18.4 DM objectives ................................................................................................................................................................. 29
18.5 Advertising objectives .................................................................................................................................................... 29
18.6 SP objectives................................................................................................................................................................... 29
18.7 Database Objectives ...................................................................................................................................................... 29
19.0 Budget ................................................................................................................................................................................... 30
Table 10: Worldwide Advertising Expenditure .................................................................................................................... 30
Table 11: Best Selling Models in the UK 2005 and their Marketing expenditure ........................................................... 30
20.0 Timeframe ............................................................................................................................................................................ 31
Figure 2.1: First half of Campaign ........................................................................................................................................ 32
Figure 2.2: Second half of the campaign............................................................................................................................. 32
21.0 Target Consumer Market .................................................................................................................................................... 33
21.1 Demographics ................................................................................................................................................................. 33
21.2 Psychographics ............................................................................................................................................................... 33
21.3 Target Market Size - Private buyers ............................................................................................................................ 34
Table 17: Target size breakdown .................................................................................................................................... 34
22.0 Corporate Target ................................................................................................................................................................. 34
22.1 Corporate car market..................................................................................................................................................... 35
22.2 Target Size ...................................................................................................................................................................... 36
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23.0 Consumer behaviour ........................................................................................................................................................... 36
Figure 3: First impression after testing driving (the old) Toyota Prius ............................................................................ 38
Figure 4: Opinions of hybrid technology Pre and Post driving the car ............................................................................ 39
24.0 Prius D3 Positioning ............................................................................................................................................................ 40
Figure 5: Creating new inferences........................................................................................................................................ 40
22.1 Early adopters ................................................................................................................................................................. 40
23.0 Prius (D3) Branding Issues................................................................................................................................................. 41
Figure 6: Prius Perceptual Mapping ...................................................................................................................................... 41
26.0 Communications Brief ......................................................................................................................................................... 42
26.1 The Copy Proposition..................................................................................................................................................... 43
27.0 Creative Solutions ................................................................................................................................................................ 44
28.0 Campaign strategy .............................................................................................................................................................. 48
28.1 Micro needs ..................................................................................................................................................................... 48
28.2 Macro needs.................................................................................................................................................................... 48
28.3 Push ................................................................................................................................................................................. 49
28.4 Sales Promotion.............................................................................................................................................................. 49
28.4.1 Promotion 1 ............................................................................................................................................................ 49
28.4.2 Promotion 2 ............................................................................................................................................................ 50
28.4.3 Promotion 3 ............................................................................................................................................................ 50
28.5 Advertising....................................................................................................................................................................... 51
28.5.1 National Newspaper advertisement .................................................................................................................... 51
Table 18: Media Frequency, Cost and Reach (6 months of press in total)................................................................ 52
28.5.2 Special regional Newspapers................................................................................................................................ 52
28.5.3 Bus – Rear .............................................................................................................................................................. 53
Table 19: Mega Rears (Double Deck) ............................................................................................................................. 53
Figure 7 Example of a Bus Wrap ..................................................................................................................................... 53
28.5.4 Billboards ................................................................................................................................................................ 54
Table 20: Cost and reach breakdown of billboards....................................................................................................... 54
28.5.5 Television ................................................................................................................................................................ 54
Table 21: TV Commercial cost and response rate breakdown .................................................................................... 54
Response Rate summation .................................................................................................................................................... 55
Table 22: Summery of number of Interested respondents.......................................................................................... 55
28.6 Database.......................................................................................................................................................................... 55
28.6 Direct Marketing Plan..................................................................................................................................................... 56
Figure 8: Retention of Private Buyers - Direct Mail ....................................................................................................... 56
Table 23: Direct Mail Costing, first step – Private Buyer.............................................................................................. 57
Table 24: Direct Mail costing, second step- Private Buyer........................................................................................... 57
Above the Line - DM .......................................................................................................................................................... 57
Figure 9: Acquisition from above the line activities ...................................................................................................... 57
Table 25: ATL costs ........................................................................................................................................................... 58
Corporate ............................................................................................................................................................................ 58
Figure 10: Acquisition of Fleet/Leasing/Rental companies and sales made .............................................................. 58
Table 26: Direct Mail Costing – Corporate ..................................................................................................................... 59
28.7 Personal selling to end buyers...................................................................................................................................... 60
28.8 Public Relations............................................................................................................................................................... 60
28.8.1 Press Cars ............................................................................................................................................................... 61
29.0 Performance Outcomes ...................................................................................................................................................... 62
30.0 Horizontal synergy............................................................................................................................................................... 63
31.0 Vertical integration .............................................................................................................................................................. 64
Appendices .................................................................................................................................................................................... 65
I. The Unions ................................................................................................................................................................................ 66
II. Governing Emissions: ‘Clean’ in California ‘Green’ everywhere else ................................................................................ 66
California ............................................................................................................................................................................. 66
Attempts by the UK government to persuade motorist to go ‘green’ .............................................................................. 67
Tax credits – incentives..................................................................................................................................................... 67
What the Commission for Integrated Transport think? ................................................................................................ 68
Euro 5 emission standards..................................................................................................................................................... 68
III. Problems with acquisitions and mergers ............................................................................................................................ 69
IV. Shorter lifecycles .................................................................................................................................................................... 69
V. What marketing has been able to do for Toyota ................................................................................................................ 70
VI. Corporate Culture................................................................................................................................................................... 71
Figure 11: Guiding Principles and Values............................................................................................................................. 72
VII. Toyota ‘Green’ methods....................................................................................................................................................... 72
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Figure 12: Earth Charter ........................................................................................................................................................ 73
VIII. Strategic Position................................................................................................................................................................. 74
Figure 13: The Toyota Strategy Clock.................................................................................................................................. 74
Figure 14: Strategic Groups................................................................................................................................................... 74
IX. Toyota’s Distinctiveness ........................................................................................................................................................ 75
X. Sources of fuel for automobiles ............................................................................................................................................. 75
Hybrid Technology .................................................................................................................................................................. 76
Diesel Hybrid............................................................................................................................................................................ 77
XI. Fleet Services .......................................................................................................................................................................... 78
XII. Consumers Hybrid Perceptions and myths........................................................................................................................ 78
Figure 15:Propulsion technology awareness (2004) .......................................................................................................... 79
XIII. The Toyota Range ............................................................................................................................................................... 81
XIV. London Motor Show interview and findings ..................................................................................................................... 82
XV. Estimated UK population by social grading 2005.............................................................................................................. 84
XVI. Hybrid Costs and Savings Comparisons............................................................................................................................ 85
Fuel Costs ................................................................................................................................................................................. 85
BIK company car tax .............................................................................................................................................................. 86
Hybrid batteries and depreciation......................................................................................................................................... 87
XVII. Consumer interests ............................................................................................................................................................ 88
XVIII. Past and Present Campaigns for the Toyota Prius ....................................................................................................... 89
Figure 16: Previous Prius advertisement used by Toyota UK. ......................................................................................... 89
Figure 17: Current Campaign ................................................................................................................................................ 90
XIX. Screen Shots of online request forms ............................................................................................................................... 91
Figure 18: Brochure Request................................................................................................................................................. 91
Figure 19: E Brochure Request ............................................................................................................................................. 91
Figure 20: E-Newsletter ........................................................................................................................................................ 92
XX. Readership breakdown including rates. ............................................................................................................................. 93
Daily National Papers Readership ......................................................................................................................................... 93
Sunday Papers ......................................................................................................................................................................... 93
XXI. Media Schedule .................................................................................................................................................................... 94
XXII. PR important dates............................................................................................................................................................. 95
XXIII: Profit and Loss statement ................................................................................................................................................ 96
References..................................................................................................................................................................................... 97
Books ........................................................................................................................................................................................ 97
Electronic Source..................................................................................................................................................................... 97
Annual Reports/ Industry Research...................................................................................................................................... 98
Trade/Press Magazines........................................................................................................................................................... 98
Bibliography................................................................................................................................................................................... 99
Books ........................................................................................................................................................................................ 99
Annual Reports/ Industry Reports ...................................................................................................................................... 100
Electronic sources ................................................................................................................................................................. 100
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1.0 Macro Environment
The car industry has traditionally been cyclical, responding in parallel with the economic climate they
operate within. In recent years, despite weak economic growth, high oil prices and maturity of an
oligopolistic industry, sales figures have been stable in the main markets.1 Within these markets this
can either be attributed to the emergence of new customer segments, triggering new growth or the
stability could come from the large discounts and frequent launches of new models, effectively
persuading people to buy new cars.
Price wars have arisen due to the car industry being a high fixed-cost business where capacity
cannot be reduced. Therefore, every unit sold, even if sold at low profit or loss, contributes to fixed
costs. The American manufacturers in particular have increased their reliance on incentives to shift
vehicles, a strategy that will surely lead to consumers expecting this as the norm, leaving higher
margins a distant memory. The impact of pension funds, especially for the US manufacturers can
not be ignored. In order for GM to cover their pension liabilities an additional $3,500 is added to the
price of each and every vehicle they produce, the same is also true for Ford, with these costs
representing $1,000 per vehicle.2 The UAW union in America is still very powerful and active
hindering the growth of the Detroit three.3
To cover those costs, manufacturers try to maintain a high output volume. In a report published by
the Consumers Association (2000) entitled ‘The forecourt revolution: the future of the car industry’,
it states that “there is still a predilection for building cars to stock and then pushing them into the
market.” However, output volume is less important within the industry now than it used to be, as
the benefits of economies of scale in manufacturing are becoming less prevalent as they merely
represent an industry threshold. Nevertheless, the R&D costs are increasing, as manufacturers try
to maintain shorter life cycles, while investing in new technologies. Movement within the industry
can be seen trying to counter this, with various partnerships and sharing of platforms.
R&D cost increases can be seen in this example from Toyota (Figure 1), where the increasing
expenses are depicted as is the cost of R&D as a ratio of this. It is expected that for other
companies to remain competitive then they must invest at a similar rate or proportion.
1 Main markets being North America, Europe and Asia 2 http://www.guardian.co.uk/cars/story/0,,1647254,00.html and http://abcnews.go.com/WNT/Autos/story?id=1533901 3 More on the Unions and what it means to the Detroit three. See Appendix I (The Unions)
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Figure 1: R&D Expenses as Share of Total Costs & Expenses
0
2000
4000
6000
8000
10000
12000
14000
16000¥bn
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
Costs & Expenses, total(¥bn)
9840 10219 10874 11914 13506 14500
share of R&D 4.59% 4.66% 5.42% 5.61% 5.05% 5.21%
2000 2001 2002 2003 2004 2005
Source: Own adaptation of data taken from: Toyota Annual Report 2004 (year ended March 31st 2005)
2.0 Globalisation of an industry
Globalisation has increased the intensity of competition. The once separate domestic markets, which
were protected by trade barriers, are becoming integrated supra-national free-trade areas. Trade
barriers have declined due to trade agreements (e.g. WTO, NAFTA, and ASEAN). However, this fact
at the same time represents an opportunity for manufacturers to use global sourcing and
manufacturing of components in optimal locations and distribute them to assembly locations. In
addition to this, manufacturers sell across many markets to recoup the R&D costs.
The burden of R&D costs has shifted slightly with upstream outsourcing becoming more prevalent
within the industry. However, outsourcing also poses a threat of supplier dependency, increasing
switching cost and the threat of new entrants within the industry. As suppliers try to achieve their
own economies of scale and scope in order to maximise their own profits, they must sell their
technically complex components to those wishing to buy. This could allow new entrants from
emerging economy, China. Integrating manufacturer and supplier R&D efforts have helped to secure
more security within the interdependent relations, as has just-in-time production.
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In order to gain the advantage manufacturers are now creating profits from downstream activities,
such as dealer networks, after-sales service and repairs, and in particular financing and leasing
rather than just lowing upstream costs. With more control here and direct contact with consumers
the manufacturers seem to changing their business focus. In being more consumer centric they
should be able to see that the cost of motoring and therefore lifetime value of cars is becoming an
important issue in consumers minds. 4
Governments have reacted to environmental issues by trying to reduce negative impacts (fuel taxes,
emission levels, congestion charges) and thus have narrowed the framework of operation.5 This has
resulted in greater consumer awareness and the demand for fuel efficient, ‘clean’ cars.
Manufacturers may have the opportunity to reap benefits in the form of subsidies and profits by
promoting cars such as hybrids that may stimulate new growth. As consumers become more
sophisticated, another important trend is the fragmentation of consumer segments. They demand a
high degree of customisation and frequent new model launches, thus stimulating a forced reduction
of product lifecycles.
3.0 Market Structure
Table 1 depicts the top 10 brands in terms of global sales and gives and estimate of global market
share. It is important to note that Toyota has closed the gap to GM (but not yet surpassed)
significantly since this data was published.
Table 1: Global Sales and Market Share
Global Vehicle units sold (in US$ million)
Sales (in US$ billion) Global Market Share*
General Motors 8.59 185.5 14% Toyota 6.78 153.1 11%
Ford 6.54 164.2 11% Volkswagen 5.02 98.4 8%
DaimlerChrysler 4.36 171.9 7%
PSA/Peugeot Citroen 3.29 61.2 5% Hyundai Automotive 3.05 38.9 5%
Nissan 2.97 65.8 5%
Honda 2.91 77.2 5% Renault 2.39 42.4 4%
* Global market share calculated on the basis of 60 million vehicles sold in 2003. Source: Own adaptation of data taken from: Perpetual Motion; page 4; published in: The Economist, September 4th,, 2004
4 J. Nasser, former Ford CEO, suggested, ‘The idea of selling mobility not cars’. (e.g. once a car is sold ownership will transfer for a pre-stated period, thereafter Toyota would either part exchange it at a favorable rate or buy it back for proper disposal) This notion will not be examined in any greater detail as such a business model shift would require its own IMC strategy thus distracting from the objectives that are trying to be achieved within this IMC, namely a vehicle launch. 5 The USA, the EU and subsequently the UK are looking to persuade motorist to go ‘green’. California’s strict rules, EU directives and the UK’s own ‘carrot and stick’ can be found in Appendix II.
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Table 2: Western Europe, USA and Japan Market share (January – December 2005)
Western European % Share
(Jan-Dec 2005)
USA % Share (Jan 2006)*
Japan % Share (2005)
Average market
share across these areas
VW Group 18.9 3.6 1.5 8.0 PSA Group 13.7 - 0.3 4.7 Ford Group 10.9 14.3 0.5 8.6 GM Group 10.6 24.4 0.1 11.7 Renault 9.8 - 0.1 3.3 Fiat Group 6.6 0.0 0.2 2.3 Daimler Chrysler 6.2 11.8 1.2 6.4 Toyota Group 5.5 15.1 41.1 20.6 BMW Group 5.2 3.1 1.2 3.1 Hyundai Group 3.7 5.2 0.1 3.0 Nissan Group 2.4 6.7 15.7 8.2 Honda Group 1.6 9.8 14.0 8.4 Mazda 1.6 2.2 5.0 2.9 Suzuki 1.3 0.8 11.5 4.5 Mitsubishi 0.9 0.8 3.7 1.8 Subaru 0.3 1.9 3.6 1.9 MG Rover 0.3 - 0.0 0.1 Porsche 0.3 0.4 0.1 0.3 Others - - 0.3 0.3 Total 100 100 100 100
*USA figures only represent January’s sales due to insufficient data available. Source: Own adaptation from data sourced from: AID Newsletter, Schmidt’s auto publications, 0602, 2.02.06, p ii and p16 et al Jama/JAIA. Also 0603, 17.02.06, p19 et al Automotive News
Toyota’s market share is relatively low in Western Europe when it is compared to USA and
unsurprisingly Japan. Japan does distort the average market share across these markets but it does
show Toyota’s overall dominance in that market, something they are sure to be trying to replicate
globally. The markets shown in the table above are considered by most experts as the most
important; however all see the emerging economies of China and India to be the next frontier. In
China, in 2005 the VW Group had the greatest market share (17.9%), with Hyundai Group (11.9%),
GM (11.0%), Toyota (10.7%) and Honda (8.0%) following respectively. Due to China’s strict
regulation all of these manufacturers must enter into joint ventures with Chinese companies in order
to be able to operate. China is also expected to promote a national manufacturer in the near future.
While their domestic markets is not subjected to free market rules they will have the opportunity to
enter international markets (in the same manner as Korean and Malaysian manufacturers) protected
by barriers erected in their domestic markets.
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4.0 Competition within the Industry
America’s car makers have enjoyed close to a century of growth and success. Since the Ford Model
T the industry has not looked backed and mass produced cars have become a systemic part of
economic success. Ford, General Motors (GM) and Chrysler built their empires, with Ford and GM
growing through acquisitions while Chrysler merged with Daimler-Benz to form DaimlerChrysler.
Likewise in Europe volume car manufacture grew at a steady pace, not only did Daimler find
strength in Europe but Volkswagen made a significant impact along side Renault, Peugeot and BMW
to name a few. Like their American counterparts VW, BMW, PSA and Fiat all grew through
acquisitions. Although exceptions exist (e.g. Nissan & Renault), by and large those mergers and
acquisitions have been plagued by difficulties and consumed time and large amounts of resources
(e.g. DaimlerChrysler, BMW/Rover).6 Therefore, further consolidation seems unlikely.
However, Japanese and other Asian competition do not have consolidation problems. They are far
leaner organisations which have chosen to growth organically through their own brands. Honda is
competing with Toyota in every sense. Both companies laud their prowess in the hybrid technology
field and both have the financial strength and production flexibility to incorporate further
technological change and innovation. This will become increasingly more important as consumers
appetite for fuel efficient cars increases and the technology within this market is proliferated.
6 For more information on the problematic mergers and acquisitions see appendix III
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5.0 The cars role in society and the changing framework for manufacturers
The role of the automobile has changed considerably from the early days of Fordism. From being an
item of the wealthy it has transcended over the decades into either a highly fashionable, desirable
status symbol (for the luxury cars) or into an object of necessity. However, the rising costs of
running the vehicles means cars could become an unattractive means of transportation. With
respect to long-distance journeys, cheap air-travel has almost completely replaced car travel,
especially in developed economies. It is largely because of the ever increasing oil prices that the car
industry is putting increased efforts in producing more efficient cars.
Long ago were the days of standardisation where manufacturers sold identical products with inferior
quality, which would now ultimately lead to a decline in sales and long term brand reputation.7
Customers are now demanding a higher degree of quality customisations, which is putting pressure
on manufacturers to be flexible and responsive to these needs.8 In order to continue to stimulate
demand in mature markets new models must be released with some frequency across all segments.
Innovation and R&D time has been cut in order to maintain short conception to birth times and
thereafter to shorten the lifecycle.9 This has caused greater collaboration and knowledge sharing
within the industry to reduce these costs. Flexibility in manufacturing, such as a greater degree of
outsourcing and just-in-time management will also aid in cutting cost to maintain innovation. Of
course outsourcing means dependence on suppliers and a relationship which will convince them to
continually pander to the needs of the manufacturers.
There is also a deteriorating importance of the car industry in the financial markets, although
governments still regard it as an important industry. Consequently, governments will support weak
manufacturers, and unions will make it difficult to cut jobs. Furthermore, the liquidation of assets
poses a barrier to exit.
In addition, customers place more emphasis on the brand image as cars are becoming a fashion
piece.
7 Skoda was one such car until its takeover and redesign and substantial marketing efforts. 8 By customisation it meant pseudo customisation where standardize products ranges are offered. These products are mere standardise substitutes; however the complexity comes in amalgamating these in one car. While localised constraints must be met. 9 For more on Shorter life cycles see Appendix IV
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6.0 UK Market Place
Table 3: United Kingdom – Automobiles Sales
Year 2005 % Share
Year 2004
% Share % Change
Ford Group 457,820 18.8 481,735 18.8 -5.0 - Ford 347,551 14.2 367,158 14.3 -5.3 - Volvo 38,376 1.6 40,005 1.6 -4.1 - Land Rover 43,769 1.8 41,401 1.6 5.7 - Jaguar 26,328 1.1 32,535 1.3 -19.1 - Aston Martin 1,796 0.1 636 0.0 182.4 GM Group 362,955 14.9 362,899 14.1 0.0 - Vauxhall 317,353 13.0 325,012 12.7 -2.4 - Chevrolet/Daewoo 18,137 0.7 17,593 0.7 3.1 - Saab 27,465 1.1 20,294 0.8 35.3 VW Group 336,345 13.8 329,186 12.8 2.2 - Volkswagen 185,519 7.6 181,897 7.1 2.0 - Audi 82,496 3.4 77,039 3.0 7.1 - Skoda 37,803 1.5 35,029 1.4 7.9 - Seat 28,431 1.2 33,228 1.3 -14.4 - Bentley 2,096 0.1 1,993 0.1 5.2 PSA Group 243,908 10.0 273,418 10.7 -10.8 - Peugeot 144,332 5.9 167,822 6.5 -14.0 - Citroen 99,576 4.1 105,596 4.1 -5.7 Renault 174,743 7.2 189,342 7.4 -7.7 BMW Group 156,436 6.4 145,860 5.7 7.3 - BMW 111,666 4.6 102,200 4.0 9.3 - Mini 44,770 1.8 43,660 1.7 2.5 Toyota Group 137,357 5.6 135,269 5.3 1.5 - Toyota 122,534 5.0 121,081 4.7 1.2 - Daihatsu 4,275 0.2 4,141 0.2 3.2 - Lexus 10,548 0.4 10,047 0.4 5.0 DaimlerChrysler 107,046 4.4 110,037 4.3 -2.7 - Mercedes 82,247 3.4 81,963 3.2 0.3 - Smart 10,137 0.4 11,844 0.5 -14.4 - Chrysler 14,662 0.6 16,230 0.6 -9.7 Honda 98,344 4.0 91,241 3.6 7.8 Nissan 86,727 3.6 90,223 3.5 -3.9 Hyundai Group 76,389 3.1 71,030 2.8 7.5 - Hyundai 36,640 1.5 37,611 1.5 -2.6 - Kia 39,749 1.6 33,419 1.3 18.9 Fiat Group 42,224 1.7 80,897 3.2 -47.8 - Fiat 35,828 1.5 72,825 2.8 -50.0 - Alfa Romeo 6,396 0.3 8,072 0.3 -20.8 Mazda 45,706 1.9 47,739 1.9 -4.3 Suzuki 32,090 1.3 33,656 1.3 -4.7 MG Rover 29,091 1.2 76,768 3.0 -62.1 Mitsubishi 24,972 1.0 22,573 0.9 10.6 Porsche 10,542 0.4 8,622 0.3 22.3 Subaru 8,926 0.4 8,823 0.3 1.2 Proton 1,652 0.1 1,754 0.1 -5.8 SsangYong 1,281 0.1 928 0.0 38.0 Lotus 934 0.0 879 0.0 6.3 Perodua 644 0.0 760 0.0 -15.3 Isuzu 229 0.0 510 0.0 -55.1 Others 3,356 0.1 3,120 0.1 - Total 2,439,717 100.0 2,567,269 100.0 -5.0
Source: AID Newsletter, Schmidt’s auto publications, 0601, 17.01.06, p 11
16
More specific to this report is the state of the UK market and who the major players are and where
they stand. From the table it can be seen that the two largest players in terms of market share are
the American giants Ford and GM. The UK market is one place where Toyota is struggling to steal
share from their main rivals. Lying in seventh place with a market share of 5.6%, there is still plenty
of ground to make up against front runners Ford.
Overall, in the UK market there was a 5% decline in the numbers of cars sold from 2004 on 2005
registrations. This is a decline that started in 2004 and has continued to the end of 2005. The
question that remains unanswered is when will the cycle of decline reverse? The next question that
follows is at what point manufacturers will behave as they have done in the USA and offer
aggressive incentives. The answer to this is that it is already happening, Citroen offered in the
beginning part of 2006, £3,650 cashback on the Xsara Picasso 1.6Hdi LX (according to
advertisements at that time). Long term sustainability of this strategy would prove damaging to the
industry overall as it would induce unnecessary price wars.10
7.0 Summation
As can be seen in table 4 (next page) the growing importance of suppliers, possible threat of
substitution and high bargaining power of customers reduces the overall attractiveness of the
industry. For companies already in the industry this means that competition is fierce. With further
consolidation and oligopolistic behaviour being unlikely, and with potential new entrants (from
China), competition is about to become tougher. Finally, all competitors are growing globally as
manufacturers have to recoup R&D costs in as many markets as possible in increasingly short
periods of time. Thus, those wanting to remain truly competitive must follow suit.
10 Toyota has some history in avoiding price wars in the Chicago. See Appendix V
17
11 Adaptation of table compiled by Beauchamp, Kirchhof, Weinand, (2005) for coursework submitted for International Business Strategy at Westminster Business School
Table 4: Environment – An Industry overview11
from 1920s 1950s 1960s 1970s 1980s 1990s 2000-2005 Future
Nature of Competition
low competition, based on price; profit margins: 20%
competition increasingly based on
quality; profit margins: 10%
based on quality in addition to price
(caused by superior quality of Japanese manufacturers)
fierce competition (price wars,
overcapacity); profit margins: under 5%
in addition, based on environ. friendliness & brand image; speed of new product developments & innovation (importance of R&D); still price wars; more customization; global sourcing more important
Stage of Life Cycle
Introductory phase growth in US slowing down
switch from growth to maturity in US; growth in Europe
maturing mature; enhanced by newly developing
markets
renewed growth due to economic growth
enhanced by new segments (SUVs),
product development;
growth in China, India
Proliferation of alternative fuels should generate
new markets to be exploited
PEST unionization of workers post-war period in Europe--> new
market
decreasing trade barriers; increasing internationalisation
oil crisis--> focus on environmental issues; thus new R&D required
fragmentation of customers; US bail-
out of major manufacturers
high oil price--> demand for efficient
cars (esp. in Europe); WTO,
globalisation (shift to low-cost
manufacturing locations); environ. legislation esp. in
Europe
weak economic growth (9/11; stock market crash; high
oil price); environmental issues (global warming; Kyoto
Protocol)
new technologies could fundamentally
change manufacturing
process (e.g. fuel cells and other
alternative fuels). Legislation will also create demand for
new cleaner technologies
Supplier Power
very low due to high degree of vertical integration
increasing, less backward integration & JIT outsourcing (components assembled by suppliers)--> increasing switching costs
suppliers increasingly large; assemble increasingly complex components; little backward integration; very high switching costs; new technologies could decrease supplier power due to new entrants
Buyer Power
low, few choices increasing; safety issues coming up; more focus on buyers demands;
more open markets-->competing products high due to segmentation; no switching costs
high; customers very sophisticated; increasing choice for each segment; price wars & deep discounts
Threat of Entry
low due to high fixed costs
low, separate national markets, high economies of
scale
still high fixed costs but established players enter new markets-->increasing threat
still high barriers to entry due to
high investment in robotics
low in Japan; medium in US &
Europe
increasing (entry of government-backed manufacturers, e.g. Chinese likely); barriers
to entry declining due to diminishing economies of scale & outsourcing; however, R&D costs increasingly pose entry barrier
Threat of Substitution
high, but starting to decline as car substitutes other means of transportation
increasing (cheap air travel); legislation forces people to use alternative means of
transportation
Fordism, mass production � � � Lean manufacturing (introduced by Toyota) � � � outsourcing of upstream activities Main Trends
regional production & competition � � � � � � � � � � global production, global sourcing, global competition
Increasing fuel prices & taxation; environmental legislation; demand for 'clean' solutions (hybrid, fuel cells, ethanol, Bio diesel, hydrogen)
Micro analysis
8.0 Host Organisation - Toyota
Toyota, domestically sell far more cars than their competition. In 2005, the Toyota group accounted for
42.1% of all cars sold in Japan. Their nearest rival in this market was the Nissan Group, representing
15.7% (AID et al Jama/JAIA). It is also the world’s second largest car manufacturer and it is only a matter
of time until it surpasses General Motors on that front, according to all leading analyst.
Their techniques and business concepts stem from their guiding principles and values.12 In the annual
report (2005) their Chairman said they have a “goal of realizing long-term, stable growth, as a trusted
member of the international society.” Some of this trust will be further propagated by continuing to fulfil
their 1992 environment charter, which ensures cleaner automobiles in the future.13 This seems to be in
step with society needs and government wants, and as such should ensure that the above statement is
fulfilled.
Additionally, marketing will play a critical part in bringing the aforementioned statement into reality.
Toyota is not a company that shies away from their commitment to advertising, with their measured
adverting expenditure being estimated at $2.6 bn (based on figures from Advertising Age) making it the
worlds sixth largest advertiser. Toyota’s published advertising figure in the same year, 2004 was $3.5 bn.
In the UK, Nielsen Media Research state that in 2003 Toyota was the 18th largest advertiser, spending
£48.2 million on the brand and sub branded vehicles.
9.0 Branding and Image
Toyota’s vehicles have been noted as having a higher resale value in the second hand market than
competing cars. This is a positive signal of the strength of its brand and reputation that it receives.
Residual value becoming particularly important as the cost of maintaining and running a car increases.
The Toyota brand appeals to large and varied demographic as reflected by their portfolio as such brand
communications must be inclusive of many demographics. It is only once particular cars are looked at can
the market be segmented as can their ‘typical’ target consumers.
“The car in front is a Toyota” is the copy that the company has chosen to adopt and this is certainly true
in how the brand is ranked globally and in terms of value (see table 5). This slogan has been mainly used
as a corporate message to consumers, with individual vehicles having their own essence summed up in
12 See appendix VI for guiding principles and values 13 Environment charter to be found in appendix VII
19
different copy lines. The important thing with “the car in front is a Toyota” is to make everyone believe
that this is true, both in innovation and style. At least in the product categories in which they operate
within. In giving each of their cars a sub brand they can effectively model and shape its identity in order
for it to relate to target consumers.
Table 5: The Top Global Automotive Brands 2005/06
Brand Millwood Brown* Rank
Value ($m) InterBrand Rank**
Value ($m)
2005 2005 2006 2005 2006 2005 Toyota 10 30,201 7 9 27,941 24,837 BMW 17 23,820 15 16 19,617 17,126 Mercedes-Benz 10 11 21,795 20,006 Honda 19 19 17,049 15,788 Ford 30 22 11,056 13,159 Audi 74 79 4,165 3,686 Hyundai 75 84 4,078 3,480 Porsche 80 76 3,927 3,777 Nissan 90 85 3,108 3,203 Lexus 92 NA 3,070 NA Source: * WPP annual report 2005 p82, ** Business Week, the top 100 brands 2006, http://images.businessweek.com/ss/06/07/top_brands/index_01.htm?campaign_id=di4
Millwood Brown and InterBrand both agree that Toyota is the top automotive brand globally. However,
the agreement ends there. The ranking of Toyota in relation to other non automotive global brands differs
marginally as does the valuation of the brand (especially so with BMW and Mercedes-Benz). This differs in
the UK market where Superbrands found that consumers ranked Toyota 317th amongst the super brands
and 9th amongst the automotive brands.
Table 6: Superbrands’ Top automotive brands Rank Brand YouGov Index Council Index
4 Mercedes-Benz 88.7 93.0 5 Porsche 87.5 87.7 15 BMW 78.7 94.6 16 Jaguar 78.5 85.8 127 Lexus 49.6 75.3 248 Volvo 37.9 80.2 250 Saab 37.8 69.0 260 Ford 37.2 76.2 317 Toyota 33.0 73.6 380 Honda 29.3 79.4 381 Mini 29.3 80.0 416 Peugeot 27.4 68.3 446 Vauxhall 24.3 67.3 470 Mitsubishi motors 23.4 58.6 492 Renault 21.2 69.5
Source: SuperBrands http://www.superbrands.com/uk/
20
The Toyota brand possesses three distinct traits, they are known for quality, durability and reliability. In
the 2006, J.D. Power and Associates quality control survey, Toyota including Lexus took the top spot in 11
of the 19 vehicle categories. Overall, Toyota was placed in 4th with the executive director of quality and
customer satisfaction research at J.D. Power commenting “They’re the closest thing to defect free.” This
comment is important to convey (through PR activities) in a climate where servicing costs are an
increasing issue for consumers.
10.0 Toyota’s products and price
Toyota has a varied range each appealing to different target segments. Inclusive of this range is the
inexpensive small car (e.g. an Aygo) to the more expensive executive car (e.g. Amazone) and of course
their cash cow middle of the road (or popular priced) car, the Corolla.14 With such an extensive range in
both product and price (cars cost from £6,700 - £51,000 in the UK) Toyota places itself into direct
competition with all the major players in the market place.
One segment in which Toyota has had and will continue to have an important part in developing is that of
hybrid cars. Competition in this area is currently relatively low, although this will rapidly change with Ford,
PSA and others entering the segment. In this market prices will also vary depending on the type of car
and the segment it is aimed at. However, currently the cost of a new Prius ranges from £17,700 to
£20,200, whereas its most direct competitor Honda (Hybrid Civic) is pricing their two-seater from
£16,300.15 This puts Toyota in a strong position (and aids it to develop the segment) within in the hybrid
market place as it offers a middle of the range car for a popular price.
14 In the USA a separate brand called Scion exists for the most inexpensive brands and is marketed mainly to first time car buyers 15 Other cars in this price range are the Jaguar X-Type, the Ford Mondeo, the Honda Accord and the BMW 3 Series Saloon
21
11.0 Financial Highlights
Table 7: Toyota’s Financial Ratios
2000 2001 2002 2003 2004 2005 Net Income (in Yen millions)
481,936 674,898 556,567 750,942 1,162,098 1,171,260
ROE 7.10% 9.60% 7.80% 10.40% 15.20% 13.60% ROA 2.90% 4.00% 2.90% 3.70% 5.30% 5.30% ROCE 7.10% 7.80% 10.00% 11.30% 13.40% 13.40% Cash Dividends 24.00 25.00 28.00 36.00 45.00 65.00
Source: Own adaptation of data taken from: Toyota Annual Report 2005 (year ended March 31st 2005)
As can been seen by the table, financially Toyota is becoming increasingly stronger. Net income has more
than doubled over the last 5 years for which their shareholders are being rewarded in dividends. This also
acts as a way of keeping share value high and as such increasing the value of the company. Only their
return on equity ratio has fallen over the 5 year period but with dividend increasing over this period it
suggests that this small decline has less relevance than it first appears. Also there is a net increase in ROE
of 6.5% over the beginning of this period,16 a positive sign that the company is well placed to take on
future challenges.
Table 6: Ford and GM’s Financial Ratios
*includes the sale of Hertz Motor company for ($1095 where operating profit with this exclusion would sum to $901)
General Motors ratios are far less positive reflecting the financial struggle facing the corporation. Ford is
only posting positive figures due to an exceptional sale of subsidiary company Hertz.
16 With no exceptional items occurring
Ford 2004 2005* Net Income (in $ millions)
3,487 2,024
ROE 20.60% 14.38%
ROA 1.18% 0.75% ROCE 14.18% 28.67% Cash Dividends 0.40 0.40
GM 2004 2005 Net Income (in $ millions)
2,804 (10,567)
ROE 10.10% (67.58)% ROA 0.58% (2.22)% ROCE 16.14% 23.10% Cash Dividends 2.00 2.00
22
12.0 The Toyota Way
The ‘Toyota Way’ is a concept that encompasses wider business practices that have since their evolution
been incorporated as industry standard. The Toyota Production System (TPS) is an integral part of the
legacy left by Taiichi Ohno17, who implemented its foundation. This system encourages and expects
employees to improve the production process, allowing for constant and successful modification that will
fit the changing environment. In reducing ‘waste’ both in a physical and bureaucratic sense, Toyota has
been able to become more flexible in production using minimal of resources, without compromising
quality.18
13.0 Going Global
After success of operating a transnational, hybrid strategy,19 Fujio Cho has commenced Toyota’s shift
towards a global company and has succeeded in exporting the Toyota culture to overseas manufacturing
locations. This enables Toyota to enjoy the benefits of global sourcing and manufacture their products in
the most cost effective way.
Toyota has less financial burdens than its main US rivals resulting in access to cheaper external sources of
finance, which can be deployed to build a sustainable position.
In contrast to most of their main competitors, Toyota has distanced itself from acquiring other
manufacturers, thereby retaining its financial assets and being able to focus its activities mainly on one
brand. Added advantages are a higher degree of co-ordination and the ability to serve a broader market
segment with one brand (marketing synergies can arise from this). While competitors serve the market
with several brands that have to be positioned precisely in order to avoid overlapping competition. In
hindsight, the organic growth strategy adopted by Toyota has left it in a position to embrace globalisation
and to establish itself as a global player.
The main danger faced by Toyota being truly globalise is that it becomes more susceptible to the
environment and less able to have a controlling influence due to chains of command lengthening. Internal
linkages will come under pressure as Toyota is forced to move more of its operations to overseas locations
and recruit more non-Japanese executives. This may pose a threat as the ‘Toyota way’ may become
diluted. However, at the present speed of transition, Toyota has successfully managed to retain the
company culture by balancing the need to grow and globalise against the necessity of educating
employees. In continuing in the same manner the problems envisaged should not be forthright.
17 Taiichi Ohno, Toyota's chief of production in post-WWII period. 18 Corporate Culture and linkages to suppliers - and how they helped Toyota’s success. See Appendix IX 19 Strategic position. See appendix VII
23
14.0 Distribution Network
Currently, two main forms of distribution exist for Toyota. Either, cars are sold through independent
affiliate retailers, who also sell other marques along side the Toyota brand, or the cars are sold in Toyota
branded showrooms.20 In the branded showrooms, the Lexus brand does also feature for Toyota to be
able to capture the luxury end of the market. On their website just over 200 dealers are listed spanning
the length and breadth of the UK. Distributors are not only fundamental in being able to maximise profits
by cross selling but also have a critical role in obtaining high consumer satisfaction.
In the Top Gear Survey 2005 which ranks actual consumers satisfaction, the brand that ranked the
highest was Lexus (scoring 93.2 out of 100) and Toyota can be found in 5th place with (88.4). In the same
survey their customer care consistently scored 4 out of 5, meaning there is room for improvement. After
sales service, is an important part of creating loyalty and therefore lifelong customers.
15.0 Main Issues Facing Toyota
A sustainable advantage is gained from linkages to suppliers as they have been nurtured over time and
thus cannot be copied easily.21 The tangible results of these linkages occur in many areas, ranging from
production to R&D where they mainly reduce costs and provide for flexibility. In the light of increasing
supplier power within the industry, Toyota’s current superior linkages will dilute these pressures and, in
addition, Toyota will benefit from economies of scale on a global level that large suppliers can achieve.
Apart from these main issues facing Toyota, the likely implementation of environmental legislation will
force many manufacturers to come up with suitable solutions such as hybrid cars. Toyota, however, has
already positioned itself in this segment and has accumulated valuable knowledge in developing,
producing, and marketing environmental friendly solutions. Toyota has actively changed the marketplace
and made such cars acceptable by introducing the ‘Prius’, which has ensured first-mover advantage into
this future-orientated growth segment.
As the car industry is in a mature phase where growth is limited to emerging markets, gaining market
share from competitors is the most effective way for Toyota to grow. In Britain, this is obviously the only
way to achieve greater success. One way to find new growth is through product differentiation an
example being a hybrid car range.
20 The EU block emption for automotive distribution and servicing expired in September 2002. This opened distribution up to free market forces, allowing for supermarket car retailers and more independent retailers. However, manufacturers still retain the right to select main Toyota dealer so they can protect their brand. 21 For more on the benefits of close ties with suppliers. See appendix IX (Toyota’s distinctiveness)
24
In investing in R&D of hybrid cars, Toyota has strategically positioned itself to bridge the gap between
conventional combustion engines and fuel cell or hydrogen technology. Hybrid cars, along with other
factors such as the global and local environmental legislation and regulations, and the diminishing supply
of fossil fuels will fundamentally change the industry. These changes are underway and the industry is
should be seeing their effects with more prevalence within the next 5 years. Especially so with
governments promoting ‘green’ products and possibly in the future offering greater subsidies to allow the
hybrid market to grow.22
16.0 Conclusion & Recommendation
In light of the ever increasing costs of motoring through oil prices and the burden that the government’s
Green policy will in the future place on the driving population. Consumers will become more open to
replacing their high CO2 emission cars for something far greener and ultimately far more efficient.
Attempts at wholly electric cars have failed due to the lack of being able to drive long distances and poor
top speed. As such, it is felt that the hybrid car offers the consumers the luxury of oil based fuels with the
savings potential of electric. As Toyota already has developed and launched a petrol hybrid it is thought
that a (bio) diesel hybrid is missing from their portfolio. With diesel becoming increasingly popular in the
UK (see Table 7) it is important that Toyota is not left wanting. Furthermore, a hybrid diesel would bring
about fuel economies far beyond what a Prius could offer and like many new diesels cars it should be bio
fuel compatible. 23 Leaving, Toyota in a position to be one of the first manufacturers to gain access into
the potentially lucrative market place.
Table 7: Diesel car sales in the UK
% European share
Year 2005 Dsls
Year 2005 Diesel Share
Year 2004 Dsls
Year 2004 Diesel Share
% Diesel Change
12.5% 897,900 36.8% 835,300 32.5% 7.5% Source: AID:0603:p13
Such a car would also reflect their ambitions according to the Earth Charter, while also making sure that
they are staying ahead of competition. This development would also do much for the brand and
reputation especially in the field of Toyota being at the forefront of innovation. And with Toyota having a
deeper understanding of this technology than most, both the Prius and the new Launch car could
potentially share many of the same components, creating greater economies and reducing R&D costs.
This would allow Toyota to continue their cost leadership approach to business.
22 See appendix II (Attempts by the UK Government to persuade motorist to go green) for government incentives, tax breaks and support. 23 For more information as to why (bio) diesel hybrids are the most viable option, rather than ethanol, hydrogen or fuel cell only cars can be found in the appendix as can a more comprehensive evaluation as to benefits of bio diesel hybrid cars. See Appendix X: Sources of fuel for automobiles
25
Such a product development would also extend the performance of the current Prius, making it more
attractive to consumers and fleet buyers who consider petrol as a superior fuel and hybrid as the best
solution but still have yet to convert.24 However perceptions of hybrid and in some circumstances diesel
still need to be overcome25 and this will have to be done through a comprehensive 360 degree marketing
communication strategy, giving the bio diesel hybrid an identity to trade upon. The task of the next part of
this project is to develop a marketing communications strategy for the launch of the first Toyota (bio)
Diesel Hybrid in the UK market.
17.0 Product information
17.1 The Product
AID (2006:0610) writes that the ‘biggest single aspect of this year’s consumer buying trend…is that more
and more new car buyers appear to seek shelter from the looming fuel price storms, by opting for smaller,
cheaper more frugal passenger cars.’ A hybrid diesel car would address frugality in terms of fuel cost as in
many cases it would exceed the average mpg of smaller cars. Furthermore, the car will be able to
capitalise upon the growing diesel trend. Therefore, the proposed car will continue on the road that the
Prius made. In keeping to a four door saloon consumers will not need compromise between fuel economy
and size, giving them a real alternative to smaller economical cars and fuel thirsty saloon cars.
It will also give the Prius brand a face lift (a newer fresher look) with the move to diesel fronting the
change. In keeping the Prius name the car should be able to develop the benefits that the name Prius
already offers. In Latin the word Prius means first, or before. As an extension to the range, the diesel
Prius needs to distinguish itself. As such it will be hereon in named the Prius D3. D standing for Diesel and
3 to mean the third generation Prius or suggesting that the car has the ability to run on three different
fuels, diesel, bio-diesel and electric.
Product mission: The main charge of this IMC project is to launch the Prius D3 into the UK market.
Note: due to the relatively low awareness and availability of bio diesel fuel this will not be featured in advertisements. Moreover, much effort and cost would have to be invested into educating consumers.
24 See appendix XI Fleet Services 25 See appendix XII hybrid perceptions
26
17.2 Product functions and point of difference
The combination of a diesel hybrid becomes evermore appealing due to its fuel efficiency. With a particle
filter fitted as standard the diesel engine would emit similar if not equal quantities of pollutants and it
would also produce less carbon dioxide.
Jean-Martin Folz Peugoet CEO was quoted in AID magazine as saying ‘the HDI Hybrid produces a
complete breakthrough,… a 30% lowering of fuel consumption and CO2 emissions compared to similar
vehicles equipped with just the 1.6 HDi engine, which is already hugely optimised where reduced
emissions and consumption are concerned.” This would make it as ‘brown’ if not ‘green’ compared to the
petrol Prius. Moreover, using any grade of bio-diesel would compound its green status and also the costs
of powering the car.
Table 8: Emission levels of existing vehicles26
Source: http://www.environmentaldefense.org/TailpipeTally/
This table shows that Toyota is far less polluting that the other brands of automobiles. More importantly
compared to the Honda Civic hybrid, Toyota has fewer emissions, an excellent USP for the target
psychographic.
At this juncture it is import to iterate that the Prius D3 must serve as a boosting mechanism to Toyota
hybrid technology, due other marques having jumped on the hybrid bandwagon and as such cluttering the
market place. Although, Toyota are not in the habit of manufacturing the most eye catching cars that
‘wow’ audiences, they do look for mass market appeal within their target and rely on offering value for
money.
26 Based on 12,500 miles travelled per annum by 2004 models and all figures are American measurements
Model Consumption (US gal)
Cost Carbon Dioxide
Carbon Monoxide
Nitrogen Oxides
Hydro- carbons
Ford Focus (27.9 mpg, BIN 8) 448 $864 8682 lb 307.3 lb 12.7 lb 7.9 lb VW Golf (26.5 mpg, LEV II) 471 $909 9136 lb 307.3 lb 8.6 lb 6.9 lb Jaguar S-Type (21.1 mpg, LEV II) 293 $1145 11505 lb 307.3 lb 8.6 lb 6.9 lb Honda Civic Hybrid (47.7 mpg, BIN 9) 262 $506 5088 lb 307.3 lb 15.4 lb 7.0 lb Toyota Prius (55.6 mpg, BIN 3) 225 $434 4363 lb 208.3 lb 7.2 lb 5.5 lb
27
17.3 Price
In order to establish a price range for the car (with a lack of R&D and other business data) three areas
will be looked at. Firstly, comparably pricing the car so it fits into the portfolio as to not cannibalise sales,
secondly the premium that diesels attracts and thirdly to understand what price range fleet purchasers are
buying at.
Currently the Prius is priced from £17,000 to £20,000. However, appendix XIII (depicting the portfolio)
suggests that Toyota is currently not manufacturing a four door saloon that sells between £20,000 to
£24,000 OTR. Diesel cars carry a price premium above their petrol counterparts and as such so will the
Prius D3. Not only do consumers expect to pay extra for a diesel (as they realise that the price is offset by
future fuel savings) but also higher price will act as a differentiator and will also ensure that the current
Prius sales are not affected to a worse degree than any other model would be with a diesel alternative.
Table 9: The best selling fleet cars in terms of volume for 2004
Marque and Model List Price Range (£) Ford Focus 11,395-17,520 Vauxhall Corsa 6,995-12,735 Ford Fiesta 8,390-13,595 Peugeot 206 8,345-14,145 Renault Megane 11,670-19,310 Vauxhall Astra 10,995-20,235 Renault Clio 8,995-15,995 Volkswagen Golf 11,995-26,070 Ford Mondeo 15,680-24,540 Peugeot 307 11,550-17,350 Source: Mintel (2006) et al SMMT
As can be seen in table 9, fleet buyers tend to purchase the more inexpensive cars. However, there is still
a place for the top end cars to be comparably priced to Golf or Mondeo. As such the Prius D3 should still
be desirable to the corporate clients (as future savings will offset all of the initial price tag costs). This
vehicles cost efficiency will optimise its desirability both to corporate and private buyers.
28
18.0 Campaign Mix Performance Objective
18.1 Business Objective
Toyota must continue gain market share currently 5.0% (122,534 units), thus a primary objective is:
• To sell 3,750 units in the first year of launch. This would match the unit sales for the Prius petrol
2005 (AID).27
• To increase overall market share by 0.15% (through Prius Diesel sales alone) in the UK. This
would increase the number of units sold by Toyota by 3%
• Generate revenue of £82.5 million through the sale of Prius Diesel
• Increase awareness and understanding of Hybrid technology by 30% and 40% to 81% and 80%
respectively amongst the target market.28
Hybrid technology awareness levels differ depending on which research is read. As such TNS should be
commissioned to redo their research at the end of the campaign so that all variables remain constant.
• Fundamentally having Hybrid synergy drive technology and Toyota explicitly linked.
18.2 Marketing Objectives
Measure interest of consumers to the product through time spent on the website, qualitative and
quantitative research.
18.3 PR objectives
• Increase understanding of product and the way in which Toyota is developing the much needed
technology
• Spur on the energy debate and show that Toyota and the hybrid-synergy drive is moving towards
the solution
• Generate awareness of diesel hybrids and the viability of the car in consumer’s eyes
• Generate favourable coverage
• Show that the Prius Diesel has the lowest emission among comparable cars
In summation, turn the somewhat sceptical non users today into optimistic user of the future. Make them
believe that hybrids are a move forward in replacing the conventional powered automobile.
27 Prius Petrol sold 1,590 units in 2004. (http://www.carpages.co.uk/toyota/toyota-prius-07-04-05.asp) In 2005, 18,758 units (an increase of 130% on the year before) were sold throughout Europe and globally over 500,000 units. http://motoring.timesofmalta.com/article.php?id=702 28 Seen Appendix XII
29
18.4 DM objectives
To reach sales of all 3,750 cars (as all sales will be intrinsically linked through the DM programme)
through a programme balanced as follows:
• 53% through acquisition of corporate customers (feet buyers)
• 3% through retention of previous Toyota buyers (as these people will be on Toyotas database and
can be targeted and approached with fewer difficulties)
• 44% through acquisition of new customers
A strong call to action is required to test drive the new Prius D3, for customers to able understand the
technology.
18.5 Advertising objectives
• Generate model and brand awareness (model being the most important).
• 80% amongst target market
• Brand development - secure first mover perception, seen as an innovator
• Create a greater affinity to the brand
• SuperBrand Ranked Toyota 317th in Briton’s favourite brand. It this relatively low performance
that needs to be surpassed (aiming to take Ford position) for next years list.29
18.6 SP objectives
• Achieve 8,000 test drives with an average conversion rate of 20% of the testers.
18.7 Database Objectives
• Acquire 30,000 number of unconverted enquires onto a database, which will later be used to
target these people through direct marketing
29 See table 6 section 9.0 Branding and Image
30
19.0 Budget
Table 10: Worldwide Advertising Expenditure
Rank Brand Worldwide advertising spend 2004
$m
% change
US measured media
spending 2004 ($m)
% change
Spend by region ($m)
2004 2003 2004 2003 2004 2003 Asia Europe Latin America
4 5 Ford Motor Co. 2,798 2,434 15 1,643 1,449 13 98 919 51
6 4 Toyota 2,608 2,475 5.4 1,098 1,016 8 901 499 20 8 8 DaimlerChrysler 2,371 2,081 14.1 1,811 1,607 13 38 439 30
Source: Ad Age Global Marketing Report November 2005 et al WPP annual report and accounts 2005
As can be seen Toyota is the second largest automobile advertiser worldwide and increased their
expenditure by 5.4% showing their commitment and understanding of the importance of advertising
activities. This sustained increase has also been seen in the UK, according to Creative Club from 1st
January 2005 to 31st December 2005, Toyota spent £58,815,080 in advertising an increase of £10 million
on 2003’s expenditure. Of which nearly 28% was spent on TV advertisements (£15,836,252). The
majority of expenditure occurs in the first and last quarter, with July also proving to be a high expenditure
month.
Single Model marketing expenditure amongst other automotive brands varies. Table 11 shows the
expenditure in relation to the best selling models. As can be seen with the exception of the Honda Jazz,
Ford Ka and Mini, marketing spend is in excess of £7 million. Due to the competitive nature of the
industry, in order to gain a visual presence, which is on par with other models similar expenditure should
be expected or exceeded.
Table 11: Best Selling Models in the UK 2005 and their Marketing expenditure
Rank Model Marketing Spend (£) 1 Peugeot 206 11,048,876 2 Ford Fiesta 11,328,693 3 Mini 3,977,946 4 Vauxhall Corsa 10,875,669 5 Volkswagen Golf 16,584,611 6 Ford Ka 3,886,557 7 Toyota Yaris 12,841,677 8 Honda Jazz 25,543 9 Renault Clio 7,090,147 10 Ford Focus 23,905,013 Source: SMMT/Nielsen Media Research et al Marketing September 2005. Figures represents sales ending for the year 31st March 2005
31
In this campaign the corporate brand is considered an integral element. The Prius D3 should be seen as a
flagship sub brand, which encapsulates the essence of the way Toyota sees the immediate and long term
future. This brand must stand for innovation, using technology to solve and create cleaner transportation.
Toyota is seeking to become environmentally friendly.
As this is not only a model branding exercise, the communications budget will be set at £12.5 million, this
matches expenditure on the Toyota Yaris.
20.0 Timeframe
The will campaign will last 12 months and run from April 2007 till March 2008 inclusive. This includes lead
times and post analysis.
The creative brief will be issued to whole communications agencies (except PR) to bid upon in September
2006. This will allow them one month to prepare and propose their solutions. The winning agency will be
required to submit finished advertisements both TVC 1 and Print on the first of February 2007 for finale
approval.
Media space will be bought in December 2006 for the year’s campaign to ensure desired spaces are
acquired. Although, some media space in the second half will be bought closer to the time to ensure
continuation only if first half is successful.
The first press advertising will go to print to coincide with the European launch at Vienna. The first TVC
will air one week after the launch as it is expected that at it this point PR press coverage will wane. This
should provide synergies amongst reviews and advertising, maximising initial impact.
32
Figure 2.1: First half of Campaign
Figure 2.2: Second half of the campaign
Despite the Governments best attempts to remove seasonality in car purchasing, there still remains two
months where sales always peak. March and September are the months in which new registration occurs.
However, evidence from Mintel (2004) suggest that only 7% of consumers would actually delay purchase
for these dates, so much of the peak can be explained by dealerships trying to reach manufacturers
targets. Winter is one period where private buyers are less likely to make a purchase due to weather
conditions.
Internal Combustion Engine: Performance, Fuel Economy and Emissions
Interim sales figures to be released internally and to shareholders the public
Aug Sept Oct Nov Dec Jan Feb
TVC2 to start
Press Campaign to restart based on TVC2 imagery
End of campaign
Campaign ends, measurement and evaluation to begin
DVD to be released in the Times on Sunday
PR, press release about CVT- Hybrid 2007
Campaign measurement and evaluation to conducted to see whether targets will be reached
Bus wraps to stop
TVC2 to Stop
Press campaign to stop
Start of campaign
Global launch at Seoul Motor show
European Launch at Vienna Motor Show
Information to be sent to showrooms as to inform employees of the new cars features
Feb Mar April May June July Aug
First Prius D3 to be shipped to showrooms, ready for European launch
Direct mail to be sent to companies
TVC1 to stop
Direct Mail to be sent to previous Toyota customers fitting the demographic to inform of the Prius D3
TVC1 to start
Monthly E-newsletter to contain launch info
Press Campaign to continue
PR, reporting what happened at the Hybrid Vehicles Symposium
Press release informing of impending launch
Press Campaign start based on TVC1 imagery
PR – documenting the launch
PR – European launch
Bus wraps to start (16 weeks)
National and London Billboard to start – end of month will stop
33
Conversely, Mintel (2004) finds that there is a slight peak in fleet buying during the winter so that they
have new cars for the coming year. However, Mintel (2006) states ‘there is little seasonal variation in
demand in this sector, and the small variations are inconsistent between the years.’ Ultimately, it can be
concluded that their neither a good nor a bad time for selling cars.
21.0 Target Consumer Market
21.1 Demographics
Primary Target: A B Males and Females Aged between 35 – 64 years This target group has been chosen on the basis that these will be able to afford a new vehicle of £22,000.
Mintel 2004 state that ‘45+ age groups are more financially secure and thus more likely to be able to
afford a new car.’ This is also the group that are most likely to fit the psychographic suited to this car and
who will buy new from a franchised dealer.30
21.2 Psychographics
They have embraced the world and all that it can offer; occasionally this meant doing damage to the
environment along the way. Starting a family and raising their children became another part of life’s
stresses and joys. However, it did not stop them from working hard in their careers to become successful
urbanites. All this hard work has afforded them a good standing in their communities which is equally
affluent.
Growing up in the swinging 60s has left the scare of the peace and love movement, this hippy fairing
generation may not have been as environmentally friendly as they would have like, after they fell into the
throw away lifestyle because of the ease it offered them while their children grew up. Now post family,
they want to repay the debt to the environment in the best way they can. They have a positive green
attitude and like to feel they are doing the best. It is time to give something back.
The educated middle classes who are financially secure. Post the largest commitments (their children)
they now have cash to spare and are looking to replace the family car or to add a second car to their
driveway. Hence the reason why price is not the biggest motivator in the decision making process. In
hitting terminal values such as ‘freedom’ and ‘friendly’ shows how import attitude is to the purchase.
30 The psychographic was largely developed from a discussion about current hybrid buyers with a Honda representative at the London motor show (see appendix XIV)
34
These are the people that want their voices heard but they are not aggressive in nature. If a car says
something about you then this car should scream I am the friendlier face of the future. Being future
orientated is what these consumers mindset is.
They need not be technology savvy as the technology of the car is only there to assist and increase
functionality. Rather, than a complex piece of machinery that needs to be mastered. However, for some
this car because of its technology will help to elevate their social status.
21.3 Target Market Size - Private buyers
The target population has been estimated using data from Mintel 2004 and NRS.31
Table 17: Target size breakdown
Target population People A 1,818,000 B 10,552,000 Total 12,370,000 Desired target (48% aged 35-64)
5,937,600
22.0 Corporate Target
Fleet buyers include car rental companies, large public or private corporations and public sector
organisations. In 2005, company cars represented 53% of all new cars registered according to the
Department for Transport.32 For those wanting to buy from Toyota it is highly likely that they would deal
with the Toyota Business Fleet Network or indirectly through an independent leasing company rather than
an individual showroom.
Corporate customers are more clinical about their purchasing decisions but at the same time they are
susceptible to consumer targeted advertising, which will undoubtedly influence their decisions. More so
now that employees are liable for covering some the company car tax. Employees must contribute 22% or
40% of the total company car tax payable depending on their income tax bracket, so they have increasing
premise to make their own demands.
31 See appendix XV for a detailed breakdown of social grade and age. 32 Transport Statistics Bulletin, vehicle licensing statistics 2005
35
In their decision making process these aspects are looked at:
• acquisition and disposals, • competitive financing, • fuel incentives, • vehicle management, • sourcing vehicles at competitive prices that fit requirements, • insurance group and for some
• vehicles that are environmentally friendly as to fit into their environment charters/policies
22.1 Corporate car market
Company cars are essential for high mileage middle management/sales representatives. These companies
will either provide cars for their employees or as an increasing number do, they will give their employees a
car allowance to put towards a privately owned car. This is in order to avoid company car tax. Mintel 2006
suggests that over the last 6 years some of the UK biggest companies have reduced their fleet by over
30%. Furthermore, they report that an increasing number of drivers are opting for a cash imbursement
rather than any car. It is the goal of Toyota to capture as much of the remaining market as possible,
which is still sizable.
Corporate cars are highly utilised assets, Mintel 2006 states that ‘replacement cycles for corporate cars are
significantly shorter at just under 3 years, compared with over 4 years for all cars…however annual
mileage maybe up to 25% higher than that of vehicles solely in private use.’ Much of the thought behind
their purchase is monetary and the financial sense of the Prius D3 must be explained.33 A Prius D3 as
company car that has to drive through or into the London congestion car zone can save £2,000 in charges
per annum and £3,200 in company car tax. In addition to this fuel efficiency savings can amount from
£700 - £1,500 against an equivalent priced petrol car.34
Apart from the monetary saving there is also a movement within companies to act in a more socially
responsible way. Like Toyota they have an earth charter or similar idealistic principles which they want to
be seen as actively seeking and thus improving their own brand equity.
33 See appendix XVI for costs and savings. 34 Over 3 years this could amount to £10,000 + multiply that by a fleet and the car makes economic sense.
36
22.2 Target Size
Mintel 2006 continues that ‘the number of businesses active in the UK automotive renting industry is
2330’. The most significant association with in this sector is British Vehicle Rental and Leasing Association
(BVRLA) representing 800 members, who represent “more than 65% of the commercial vehicle rental and
leasing fleet, 85% plus of the car rental fleet and over 95% of the leasing and contract hire fleet.”35 It is
imperative to target each of these members and this will be done using Toyota’s Business fleet network
company (through direct mail).
23.0 Consumer behaviour
Car purchase is high involvement using high levels of cognitive processing with affective views also
playing a decisive part. Consumers will spend a large amount of time researching and seeking information
about cars that fits their basic criteria like size and price.
Attributes are used as a filter in the decision making process and its importance can not be ignored. The
target market is an experienced buyer with this car being unlikely to be their first. In already having an
understanding of what they require they are likely to be largely uncompromising on size and price.
However, emotion will drive the final decision once the choice has been narrowed down through the
various fixed/perceived attributes.
Table 13: Attributes Attributes Concrete Abstract Colour Quality Engine Size Comfort Price Style Safety (NCAP rating) Safe Brand Enjoyable to drive Leg Room Mintel 2004 shows results from a TGI survey that questioned around 25 000 adults about 4 key areas of
consumer automobile purchasing. In asking about functionality, looks, safety and car comfort it is possible
to ascertain the importance of these distinguishing criteria.36 It found that what buyers want first and
foremost is: how safe the car is and what features does it have to protect the driver and passenger?
35 http://www.bvrla.co.uk/public/The_BVRLA/What_is_the_BVRLA.cfm a members list is not freely available but it is safe to assume that many major manufactures are part of the BVRLA and that these would not promote or have interesting in leasing/renting/buying any Toyota branded automobiles. For the purposes of ease of calculations 2330 will be the number of renting companies that will be approach. 36 See appendix XVII for the question and numeric tables of the results.
37
Thereafter, cars are seen as a functional item and somewhat surprisingly the majority of people survey
felt that ‘looks’ is of least importance. This provides some insight into why Toyota, Ford and Honda are
selling such high volume, which many agree are not visually impressive. However, many of these cars are
not aesthetically displeasing and re-launches after a facelift does rejuvenate the car and keep it ‘current’
in the mind of consumers. Style will always sell especially when a premium is being asked for.
As the one of the largest purchases a consumer is ever likely to make, their decision is also based on the
benefits of car ownership and the fundamental values it will fulfil. Each car brings its own benefit and
values that it is able to fulfil to the table. At the same time many cars share similar values and benefits,
like that of freedom and independence or getting you from A-B while being approved of by your peers.
Table 14: Benefits and Values Benefits of a hybrid Functional Psychosocial - People
will think I'm: Miles per gallon Wealthy Takes you from A to B Caring Reliable Understanding Clever a nice person The obvious USP of a hybrid is the superior fuel economy (for its size) and the lower emissions. However,
in 2004, a survey conducted by Thun (Basis-Kontakt and Maritz Research Deutschland) and commissioned
by the Strategic Research Division of Toyota Motor Marketing in Europe, on the positioning of a green
technology in consumers consciousness found notably that fuel type was not a decision criterion in the
early stages. Unlike the aforementioned attributes, price, brand, segment, body type and design, which
were far more relevant.
Included in the survey was allowing respondents to test-drive the (first generation) Prius. After this
demonstration, testers commented on the quietness of the engine, smoothness of switching between the
two engines, acceleration and most importantly the enjoyment of the drive.
Values of a hybrid Instrumental Terminal Showing self reliance Freedom To be more environmentally friendly
Unity with nature
Show consideration
38
Figure 3: First impression after testing driving (the old) Toyota Prius
36%
54%
10%
0% 1%
43% 43%
7% 5%2%
0%
10%
20%
30%
40%
50%
60%
Much betterthan expected
Better thanexpected
As expected Worse thanexpected
Much worsethan expected
Premium Volume
The conclusion that can be drawn from this is how critical it is to get the target market to test drive (‘kiss’)
the car. A test drive in conjunction with personal selling will aid as a powerful tool in aiding understanding
and helping customers finalise their decisions.
The research further concluded that awareness of the ‘green technology’ and knowledge of the hybrid
system was low. In terms of the technology many doubt its performance and reliability, a significant
proportion even believe that a hybrid must be plugged in for recharging (a belief also observed at the
London Motor Show). The concern as to the cost of maintenance was also highlighted in the finding,
something that the Toyota representative at the motor show claimed not to be a valid concern.
Whilst this research was carried out an advertising campaign was underway in which environmental
friendliness was depicted and was the core message.37 It was found during the research that the “for all
of us” environmental advantages were able to arouse a certain conceptual interest but ultimately it was
not the driving choice. The campaign did add to a limited extent to Toyota’s overall brand perception and
cachet. However, it has since been replaced by an advertisement that leads on innovation and
technological advancement.38
The survey also conducted research on the opinions about hybrid technology to ascertain its awareness
and importance in the decision making process once the choice has been narrowed.
37 See appendix XXVI for campaign 38 See appendix XXVI for campaign
39
Figure 4: Opinions of hybrid technology Pre and Post driving the car
86%
53%48%
16% 13%
81%
72%
57%
47%
93%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
…is moreenvironmentallyfriendly than the
conventional engines
…offers intelligentperformance
combining low fuelconsumption withgood acceleration
…is a realbreakthroughinnovation
…offers high level ofdriving pleasure
…offers highperformance
Total before test drive (n=313) Total after test drive (n=308)
Like in the first survey it can be seen again from figure 4 that after testing the vehicle, perceptions
drastically changed for the better. One aspect that the majority of people surveyed seemed to understand
pre and post test drive is that the car will be more environmentally friendly than conventional cars. After
testing there was also an improvement in thoughts of fuel efficiency and performance.
The researchers recommended that as hybrid technology (or engine size and fuel type) is not a key selling
point the Prius should be positioned as a stylish, innovative vehicle offering fun to drive. Whilst these
aspects are importance since the research fuel consumption and the type of fuel due to its cost is
emerging as very decisive issue. Combining the savings with the ‘green’ aspect should act as a powerful
catalyst in terms of brand establishment and desirability.
According to informal interviews that were taken place at the London Motor Show, both Toyota and
Honda do highlight the significance of lower emission and technological advantages as something their
target psychographic find very important. It is for this reason that Toyota should continue advertising
using their hybrid synergy drive logo. Although, this logo should no longer be the main force behind future
communications as it may act as a perceptual barrier rather than something that explains the technology.
40
24.0 Prius D3 Positioning
A major apprehension that potential customers have with the Prius is the belief that it would be more
expensive to service and that it is an underperforming vehicle. These issues that must be addressed in
future communications and the Prius D3 must invoke new perceptions amongst potential customers. The
Toyota brand should aid the perceptual move (as shown in Figure xx) but as the technology is ‘new’,
persuasion will be difficult. So the campaign must ensure this shift in beliefs.
Figure 5: Creating new inferences
22.1 Early adopters
As the automobile industry continues to embrace hybrid technology and the renewed growth potential it
can bring, consumers will begin to trust the technology due to more information being available. For early
adopters the risk was significant, however manufacturers have sought to quell some uncertainty by
offering extended warranties especially on the fuel cell battery (8 years currently on the Prius). This
generation of confidence in the automobile has facilitated demand to swell as early majority start entering
the market. It is this market that it is hope will be captured by Prius D3. The established faith in petrol
hybrid should also transfer to diesel fuelled hybrids.
Due to the relatively high price, the Prius D3 automatically features at the higher end of its class range.
This position will be substantiated with the luxury gadgets and gizmos that will enthral techies and that
will generally be expected on a model of this cost. The car will be designed with two things in mind,
enhancing the experience of driving and making it pleasurable again.
Reliable
Expensive to Service
Unreliable
Cheap to service Good performance
41
23.0 Prius (D3) Branding Issues
The Prius brand does have its own problems in regards to it being one of the lesser known brands in the
range, this is compounded through a lack of understanding of the hybrid concept. Moreover, while it
scored highly in the manufacturing tests of the J.D. Power survey, its score was curtailed in areas such as
style, comfort and design (appearance). Ultimately reviews from respected car commentators need to be
starkly contrast that of Jemery Clarkson where on Top Gear he has this to say about the Prius, “To sum
up then, it’s a very expensive, very complex, not terribly green, slow, cheaply made and pointless way of
moving around.” This was in contrast to this review of the Lexus GS 450h in The Times (30/07/06) where
he was more favourable to the hybrid concept concluding it was “technology with a point.”
Figure 6: Prius Perceptual Mapping39
39 Results based upon an amalgamation of UK journalist reviews and comments left on UK based websites by Toyota users and non users (but still commentators). Note: this diagram is based purely on subjective comments and is not statistically representative and as such should be treated as results would be from a focus group.
Basic Luxury
High Value
Low Value Economical
Attractive
Poorly built
Sporty
Fuel Inefficient
Fuel efficient
42
26.0 Communications Brief40
Background
As a massively important brand in automotive industry Toyota has striven to become global leader. Their business practices have helped shaped the industry, leaving many of their adversaries to be playing catch-up. In championing a shift towards sustainability and therefore more environmentally friendly, Toyota is again pioneering new business methods and technology, which hybrid synergy drive being a flagship invention. Business & Marketing Objectives
• Increase market share in the UK territory. • Attract new customers and retain existing ones. Recruit lapsed users by reinforcing positive attitudes
towards the Toyota brand. • Increase brand awareness and recognition especially in relation to the hybrid synergy drive technology
Communication Objectives
• Communicate USP • Communicate the ‘green’ strategy Toyota is adopting. • Communicate corporate philosophy and values of Toyota. • Communicate clear call to action thus drive traffic to the Website • Communicate benefits (a cleaner burning engine, efficiency, a new way to travel ‘purity’, freedom, style,
safe, performance) • Green does not equal boring and demonstrate that the technology carries no risk.
Target Audience
Affluent (AB) post family people, who are now/or nearly empty nesters looking to ‘give something back.’ A new car has been on the cards for a few years now and he/she or they want something that they can talk about at dinner parties, ultimately it is saying we have the future of automobile travel and we/I care about the effect on the environment. Aged 35 to 64 years and is employed or just entering retirement. A car is a necessity for them. What do we want them to do as result of the communication
• Visit website and order a ‘free brochure’ (i.e. Respond to the call to action and provide personal details.) • Enquire about the car by visiting a dealership • Be less afraid of the technology • Purchase the car.
What do they want them to feel and think as the result of the communication (consumer insight)
A fuel efficient car without having to compromise on size or performance. “Performance doesn’t have to cost the earth” Single Most Important Message Dare to drive What supports the message
Toyota pioneered this technology and as a result has the lowest emissions in its class. Toyota is bringing tomorrow today, as their corporate slogan implies ‘Today Tomorrow Toyota’. The world’s largest manufacturer leading the way and trying to make a real difference. No longer do they have to fear the technology, nor do they have fear cost driving (economic and environmental) Personality/ Tone
Reassuring, reliable, trustworthy, caring, understated, daring, intelligent Guidelines
• URL to be visible. • Logo. • Maintain Toyota’s colouring and font. • Hybrid Synergy Drive to be used. Not to be too prominent.
Requirements and Mandatories • TV and press reflecting AB profile. • 8 years warranty on the battery.
Timing
12 Month Campaign, starting Feb. 1st 2007 Budget
£ 12 500 0000
40 Adapted from Club Mediteranee, Direct Marketing Management coursework, Westminster Business School
43
Shinichi Sasaki, president and CEO of Toyota Motor Europe (TME), said, “our aim is always to provide
customers with the superior quality products, services and value they deserve…while developing advanced
technologies to respond to demands for greater sustainable mobility."
26.1 The Copy Proposition
The ‘Dare to Drive’ copy has been chosen because the target audience needs to be tempted/dared into
driving hybrid technology. Furthermore, it is also playing on the consumers fears about the cost of driving
and possibly the cost to the environment. As the hybrid can significantly lower fuel costs it is giving hybrid
drivers a reason to drive. No longer will every trip have to assed upon necessity or not, the Prius D3
should simply be driven.
44
27.0 Creative Solutions
The creative solutions are merely suggested. They are designed to spur on a Creative and not meant to constrain creativity. It is hoped that including their design into this report will enable the reader to follow the imagery and to be clear on what message ultimately needs to be conveyed. TVC1 Opening shot, a fast moving Prius D341
Voice Over: “Driving one of the most fuel efficient and technologically advanced cars in the world, is an experience that you’ll never forget.” Computer generated internal shot of engines working together Instantly to roaring motor switches to silent serenity VO: “With its diesel and electric engine working together in total harmony, you’ll soon notice the difference. All the performance of a 1.6 diesel, the comfort of a saloon, and the fuel economy of a supermini, The Prius D3, the car full of solutions with non of the compromises” On black, red type appears - Dare to… Drive VO: Discover motion in harmony. The Toyota Prius D3, where performance doesn’t cost the earth. An image of the car will fade in at this point Sub copy proposition While this creative leads with the main ‘dare to drive’ copy it ends with expressing reliability in harmony and ‘not costing the earth’ both in an environmental and monetary sense.
41 Image from http://www.flickr.com/photos/firebookduo/5505704
45
Print advertisement 1) Imagery – The car is to be the biggest element of the advertisement and is to use the same imagery as for the TVC1 campaign.
Dare to…Drive The Toyota Prius D3 To include the competition ‘F1 race weekend in Japan’ and ULR TVC2 The next features travelling along a wide country road passing fuelling station after station, where each
are full with a variety of vehicles. The last fuelling station has lots of small cars waiting to refuel and the
hybrid pulls along side them. Its size in comparison is obvious. The driver steps out not to refuel but to
buy a chocolate. The driver gets back in the car and drives off into the sunset.
Dare to…Drive ‘further without compromising on size’ Sub copy proposition Here the sub copy is expressing that there is no need to downsize to get fuel economy.
46
Print advertisement 2) Where size and performance does matter…
Dare to… Drive ‘further without compromising on size’ ULR also needs to be added to this advertisement.
47
Bus Rear Wrap Campaign Special London Campaign highlighting the fact that driving the Prius D3 means avoiding the Congestion Charge. Imagery
ULR will also feature on this advertisement and the car will be made bigger. All advertisements to feature the Prius D3 name on the licence plate of the car.
48
28.0 Campaign strategy
28.1 Micro needs
In owning its dealership network, Toyota will be required to communicate new model launches to each
showroom. In that communication employees must be aware of the cars name, USP, features, release
date and values that the vehicle caters to. As such brochures will be sent to all showrooms one month
before the car is due to ship and 3 months prior to this a newsletter will be sent to the dealerships for
initial awareness.
Area managers will be required to hold meetings at the start of the campaign and at regular intervals in
order to gain feedback and assess the knowledge of employees. Secret buyers will be deployed after
release and during the whole campaign in order to ensure quality of personal selling and test knowledge.
Personal selling techniques to buyers will not need to differ; there will be only slight adjustment in the
information that should be conveyed.
Toyota showrooms will be required to make space for the Prius D3 giving it a prime location during the
campaign. Car supermarkets and independent showrooms will not be target as it felt that they will not be
able to provide the optimum sales atmosphere. Furthermore, margins will be squeezed and the ability to
cross and up sell would not exist to the same degree.
Those working within the Toyota fleet centre will also receive the same literature. They will also be
informed of ‘bulk’ promotions that can be given. Promotions will vary depending on size of order.
However, discounting is not to be used during the campaign. Value offers will be acceptable form of
promotions but will be left to the fleet centre manger to decide what is acceptable.
28.2 Macro needs
As a year long campaign in which many issue needing to be addressed, the information that needs to
convey will be varying. As such it is suggested that TVC is run as a series, while Press advertisements
reflect the story being told through the TVC. Running the campaign as a series will give and interest factor
and provide a subtle reminder of development within the brand.
Note: This campaign and the creative solutions within have been designed so that the imagery can be used across Europe
(apart from the London campaign). As such all creative, design and production costs will be covered by Toyota Europe and
will not be included in the budget of the Toyota UK, unless where stated.
49
28.3 Push
There will be very little push activities required for this campaign due to the Toyota distribution network
already being established. However, Toyota must ensure that major fleet, leasing and renting companies
are contacted. They will be reached through a direct mail on the push side. However, on the pull side
there will be no direct advertisements concerning fleet operations to this audience. Instead it is felt that
they will be susceptible to the other advertising activities undertaken, which will use broad scale media.
Through this method demand should swell from fleet managers in individual corporations. Thus, fleet,
leasing or renting corporations will be forced to offer the Prius D3 or lose business to the Toyota Fleet
Network Centre (which of course they will have use for purchases anyway). Additionally, categorising the
model as a company car would be to niche the brand and could end up having a detrimental effect on its
overall appeal. A fleet microsite will be set up explaining all the cost benefits and emission levels for the
corporate buyer.
28.4 Sales Promotion
Discounting is part and parcel of car retailing. It is unique to each selling situation and is largely based
upon how good the customer is at negotiation and what profit margins the showroom will want to
maintain. However, like fleet buyers, private buyers will not be offered price discounting, instead the
salespersons are to be given usual freedoms in value offers they tender in order to secure the sales of the
Prius D3.
NOTE: it will be assumed in future calculations that the average sales price of the vehicle will be £22,000 even where
discounting has occurred.
During the campaign there will be three standard sales promotions will occur covering all customers.
28.4.1 Promotion 1
The first promotion is a value offer and is only there to act as a possible reward to those buying a Prius
D3. They will be entered into a prize draw:
The prize draw is to win a week in Japan including two VIP tickets to the Japanese Grand Prix as guest of
the Toyota team. At the birthplace of Toyota, winners will be able see the Toyota Factory and the race
from the Toyota stand at the Suzuka International Racing Course in October.
50
Budget allocated for Prize draw Flights (x2) = £1,200 Accommodation - 2 Persons (Ana Hotel Tokyo) = £1,250 Spending Money = £2,000 Race day = £550 (Grand Stand tickets) Miscellaneous = £1,000 Total = £6,000 In running this sales promotion it will create added extra interest on the advertisements which display the
offers. Additionally, it may secure some buyers bringing forward their purchase within the first half of the
campaign so they can be apart of this opportunity.
28.4.2 Promotion 2
In order to communicate detailed information to the target group who are likely to feel that a website is
not enough or difficult to navigate, a brochure will be made available. In order to fit with the ‘green’ and
non compromising image Toyota is wanting to portray all copies will made from a high quality glossy
paper that is made from 100% recyclable material.
28.4.3 Promotion 3
The whole campaign will be concluded in collaboration with The Sunday Times where a DVD will be given
away with the newspaper, which will include the 2 TVCs, video testimonials from current drivers,
performance drives and a video promo on Toyota’s corporate social responsibility programs (CSR) and
how the Earth Charter is a fundamental part of their way of thinking and manufacturing. It is a getting to
know the brand experience that goes far deeper than an advertisement could.42
The cost of the actual DVD is 5p per unit 3 495 000 x 0.05p = £174,750 Production Cost = NA Cost of Insert = £122,000 Total Costs = £296,750
42 Similar to the successful campaign run by Sony for their Bravia brand.
51
28.5 Advertising
As has been suggested by the creative solutions there will be two television commercials and print
advertisements made. A London only advertisement will ensue to ensure awareness of Congestion Charge
avoidance. All advertisement will contain a call to action to motivate persons to the Toyota website or the
Prius D3 micro site where a brochure can be ordered.43
28.5.1 National Newspaper advertisement
Run of paper (ROP) colour full page advertisements are being chosen over other sizes to maximise impact
and increase opportunities to see. Focus is been given to newspapers rather than magazines as better
synergies can be gained through combining PR activities and advertising. It is also in newspapers where
the environment and congestion debates will continue.
Each Newspaper has been chosen due to their high reach of the targeted socio demographic. A large
spread of newspapers is being used to optimise coverage. With the exception of the Express and Daily
Mail all the other national papers listed here have a high (>50%) AB readership. Making Newspapers an
ideal way to target the Prius D3s desired audience. In addition to this Newspapers will be heavily used in
PR activities creating synergies between Press Releases/reviews and advertisements. All the newspapers
will be used in table 18 to maximise spread rather than concentration. Despite the Express and Daily Mail
having lower AB profile, due to their large distribution they impact on a sizeable proportion of the AB
demographic therefore ignoring them is not an option.44
The Sunday papers have higher readership figures than the weekday counterparts. However, the cost of
higher readership is two fold, firstly the cost of advertising is higher and secondly the number of inserts
makes the paper cluttered with more advertisements. This is why it is being proposed that all
advertisements are placed in the run of the main paper. The advertisement must reach the core target
and not those just interested in certain supplements.
In running the campaign in the publications shown in table 18, the cost and response rate has been calculated.
43 See appendix XIX for screen shots of different entry forms 44 See appendix XX for readership profile and cost of display
52
Table 18: Media Frequency, Cost and Reach (6 months of press in total) Publication No. of ad
appearances Display Rate (£)
Expenditure (£)
No. of interested people (average 0.03% response rate)*
Express 8 31,500 252,000 7,068
Daily Mail 4 47,124 188,496 26,294
Guardian 24 18,000 432,000 12,402
Independent 14 22,000 308,000 7,074
Telegraph 10 59,000 590,000 15,050
Times 12 25,900 310,800 17,709
Financial Times 10 61,200 612,000 4,328
Evening Standard 12 20,000 240,000 6,051
2,933,296 95,976
Sunday Express 4 40,725 162,900 8,522
Mail on Sunday 8 51,000 408,000 33,097
Independent 10 22,000 220,000 13,887
Observer 12 22,000 264,000 6,566
Sunday Telegraph 10 42,000 420,000 14,470
Sunday Times 10 85,750 857,500 37,746
2,332,400 114,228
Total Costs 5,265,696 210,264
*Based on target reached. Furthermore, many of these interested people will read more than one newspaper so only a fraction of these respondents will be unique (uniqueness to be set at 40% across all above the line activities).
28.5.2 Special regional Newspapers
The Evening Standard is an important paper in terms of its region. More so as much of what the Prius D3
can offer can really benefit Londoners. Providing these city dwellers a car that is particularly efficient at
low speeds and that avoids the Congestion Charge. This is a paper that has a high daily readership of
affluent business people.
53
28.5.3 Bus – Rear
Outdoor advertising whilst not as targeted as newspapers, it does have the ability of reaching the target
market in a unique way, it is suggested that it would receive a response rate of 0.01%. Placing
advertisements on buses as per figure 7 is a prime example of the impact it can have on drivers. Here the
message must be simple as to communicate the message instantly.45
Table 19: Mega Rears (Double Deck) Cost per
Bus for 16 weeks
Production cost per Bus 10+
Number of buses
Total Costs Reach Response Rate
Number of Respondents
London Gold £9,280 £1,600 25 £272,000 400,000 0.01 4,000 London West End
£6,804 £1,600 30 £252,120 600,000 0.01 6,000
Grater London £5,460 £1,600 50 £353,000 200,000 0.01 2,000 Total Costs £877,120 12,000 Source: Viacom
Figure 7 Example of a Bus Wrap
45 See section 27.0 for proposed advertisement
54
28.5.4 Billboards
The National Billboard will feature imagery and copy from TVC1, whereas the London panels will feature
the artwork and slogan from the Bus campaign, as to ensure consistency. This part of the campaign will
run throughout July.
Table 20: Cost and reach breakdown of billboards
Reach Interested (RR=0.01%)
National: 100 Prestige panels (96 sheet) for 4 weeks £264,000 London : 50 Elite panels (96 sheet) for 4 weeks £172,500
300,000 20,000
Production costs for both £30,000 Total £466,500 Source: www.clearchannel.co.uk/billboards/ratecards/national (or London)
28.5.5 Television
The television campaign will run in two separate parts, both communicating a slightly different message
while remaining true to the core message. Hence each TVC will be aired for 2 consecutive months, while
then taking off air for 3 month before being replaced with the next TVC also to be aired for 2 months. This
means sustained TV coverage will run for 4 months.
Television will play a vital role in the communications process. The visual message will ensure exposure
and will aid attention and increase comprehension.
Table 21: TV Commercial cost and response rate breakdown Packages
required Cost per package (£)
Total costs Interested people (response rate 0.1%)
ITV1: Centre Break 26 TVR’s (Coronation Street)
24 82,932 1,990,368 43,000
ITV1: 21.20 14 TVR’s eg ITV drama
24 44,656 1,071,744
Channel 4 (220 TVR’s between 19:30 – 01:00)*
4 550,000 2,200,000 30,000
Total 5,262,112 Source: http://www.itvsales.com/itv/export/download/pdf/1326v04_ITV_AdvertGuideFINI.pdf *Channel 4 no longer has a rate card and negotiates each contract separately as such airtime will be based on costs of ITV1
NOTE: Advertisement Reach is the number of individuals who fit the targeted socio demographic, viewing the advertisement
once.
Response rate (RR) is the number of the reached interested and motivated to seek more information. Be this visiting the
website(s) or a showroom. Clearly many of these are ‘interested’ people will not move beyond information seeking. A large
proportion will not be motivated to leave details on the website for future information and an even larger proportion will not
commit to buy the Prius D3 within the next 12 months.
55
Furthermore, many of the advertisements will impact on peoples more than once. This will skew response rates to higher
numbers that should be expected. At the end of this analysis response numbers will be altered to reflect this fact.
Response Rate summation
While the ATL activities’ objectives were mainly to build affinity to the brand and increase awareness and
understanding of the Prius D3. They were also to motion a call to action, it is this call to action that acts
as a precursor to the DM strategy, where from their sales figures can be estimated from response rates.
Table 22: Summery of number of Interested respondents
Respondents Press campaign 210,264 TV 73,000 Bus 12,000 Poster 20,000 Total @ 40% 126,105
The ‘interested’ respondents were calculated on the basis that each media would reach separate
individuals; this is clearly untrue as many will be exposed to more than one element of the campaign. As
such, only a fraction of these respondents will be unique, it will be assumed that uniqueness will be set at
40% across all above the line activities. Furthermore, not all of the 126,105 respondents will leave any
personal details on the website or with the showroom. It is estimated that only 20% (or 25,221 people) of
these respondents would leave any contact details, in order for them to gain more information (a
brochure through DM). The majority of this target may investigate but their interest may not stem further
than a showroom or website visit.
A detailed media plan can be found in the appendix XXI showing the timing of all activities occurring with
in this campaign.
28.6 Database
This campaign will be heavily dependent on the existing databases that Toyota has and its development
and addition during the campaign run. The integrity must be insured for it to be a useful asset and all
data should be held centrally (both internet and dealership databases must be integrated). In creating a
large database not only will it aid the proposed campaign but it will also be vital in future communications
for other campaigns as targeting can be specific.
56
28.6 Direct Marketing Plan
Direct Mail can convey far more factual information and will follow a multi-step process to both corporate
and private buyers. The purpose of this campaign is to gain test drives as it is once potential customers
gain physical contact they are far more understanding of its benefits and open to the selling tactics of the
salesperson.
Private Buyers – Targeted as they are previous purchasers or have left their details on the Toyota
database. Those matching the demographics and deemed likely to be renewing their car within the next
year will be targeted. As such this DM initiative will be a retention program. First they will receive a letter
notifying them of the launch and the benefits the car can bring. Thereafter, if they enquire after more
information they will be sent a brochure.
Based on an assumed database size of 500,000 (4 years of sales including postal registered database
members). Of this number it will be presumed that it will follow the general population’s distribution. That
being true the number fitting the target is 62,160 people
According to DMIS the typical Direct Mail response rates for the automotive sector is 7.6%46 A cost breakdown will follow each DM section in order to provide clarity in how much each mail will cost
and what the likely sales numbers will be stemming from the expenditure.
Figure 8: Retention of Private Buyers - Direct Mail
46 Source: The Direct Mail Information Service (DMIS) - Response Rates Survey 2006
62,140 members DM
Motivated to website or to Phone for more information/ brochure 7.6%
4,722
Take no action Enter future
retention programs
Take no further action
Enter future retention programs
Taking a test drive
30% 1,416
Buy
18%
Enter future retention programs
254 Retained customers
57
Table 23: Direct Mail Costing, first step – Private Buyer
Tactic Unit Fixed Costs (£)
Variable Cost per unit (£)
Total Costs (£)
Letter Letter design and copy 1 2,000 Envelopes 62,140 0,20 12,428 Postage 62,140 0,2345 14,571.83 Lasering & paper letter 62,140 0,08 4,971.2 Total 31,971.03
Table 24: Direct Mail costing, second step- Private Buyer
Tactic Unit Fixed Costs (£)
Variable Cost per unit (£)
Total Costs (£)
Brochure Brochure design and copy + Letter
1 80,000 80,000
Brochure 4,722 1,00 4722 Plastic bag envelopes 4,722 0,005 23.61 Postage 4,722 0,6945 3,279.43 Lasering & paper letter 4,722 0,08 377.76 Total 88,402.80
Above the Line - DM
From the advertising activities undertaken it was previously stated that only 25,221 people will visit the
website and leave their details with Toyota (either through the website or visiting a showroom). In leaving
their details they will then receive a similar letter and exactly same brochure as those on the original
database. The letter they will receive with the brochure will invite them to take a test drive and state
where their local showroom is situated, along with contact details.
Figure 9: Acquisition from above the line activities
25,221 members DM
Motivated to take a test drive 30%
7,566
Take no action
Enter future retention programs
Take no further action
Enter future retention programs
Buy
20% 1,513 newly acquired customers
58
Table 25: ATL costs
Tactic Unit Fixed Costs (£)
Variable Cost per unit (£)
Total Costs (£)
Brochure Brochure design and copy + Letter
1 NA NA
Brochure 25,221 1,00 25,221 Plastic bag envelopes 25,221 0,005 126.10 Postage 25,221 0,6945 17,515.98 Lasering & paper letter 25,221 0,08 2,017.68 Total 44,880.76
Across the ATL and retention campaign there will be a total of 8,982 test drives occurring. Meaning that
on average 45 test drives will occur at each showroom throughout the entirety of the campaign. The
number of cars sold to ‘private’ buyers is estimated to be 1,767 or 47% of the targeted total.
Corporate
DM will be an important part in communicating to the corporate client. All communications here will centre
on cost savings and extra services that Toyota offer to fleet operators. This communication should provide
residual pay off with the possibility that fleet managers may switch entire fleets to Toyota even if they do
not opt for the Prius D3. Toyota must convey in its messages that it understands fleet management and
the importance of vehicles to businesses.
Figure 10: Acquisition of Fleet/Leasing/Rental companies and sales made
Corporate client 2,330
DM
Contact Toyota Fleet Network Centre
60% 1,398
Take no action Enter future
retention programs
Take no further action
Enter future retention programs
Take Prius D3 on to their books
85% 1,188
Buy
21%
Enter future retention programs
249 companies
59
Table 26: Direct Mail Costing – Corporate
Tactic Unit Fixed Costs (£) Variable Cost per unit (£)
Total Costs (£)
Corporate Brochure Brochure design and copy + Letter
20,000* 2,0000 2,0000
Brochure 2,330 1,00 2,330 Plastic bag envelopes 2,330 0,005 11.65 Postage 2,330 0,6945 1,597.35 Lasering & paper letter 2,330 0,08 186.4 Total 24,125.40 * Brochure is an extension of the Private buyer’s brochure. It includes relevant Benefit In Kind (BIK) taxation details and other relevant information on multiple buying and servicing.
From the 249 companies purchasing the Prius D3 it is supposed that on average 8 cars will be sold to
each Fleet/Leasing/Rental company, resulting in actual sales of 1,992 vehicles.
60
28.7 Personal selling to end buyers
A fundamental aspect in selling this vehicle is educating potential buyers as to the hybrid synergy drive
system in a way that is clear to them. Driving home key points such as ‘will never need to be plugged in’
and ‘servicing is like any other car’. Of course the sales representatives will have to use their own wit in
deciphering how educated the customer is and what is likely to create positive attitude. As such the selling
‘story’ can be catered to the individual.
In closing sales this is then the optimum opportunity to incorporate cross and up selling items. The target
demographic is unlikely to take any financing options. However servicing will be critical to maintain
profitability over the whole life of the vehicle and options to enhance features will be critical for immediate
profitability, while giving buyers a sense of customisation.
Whilst the brochure will explain the commitment Toyota has made to ‘green’ policies and the way in which
they plan to recycle their cars in the future. It could tenuously elude that in the future there is the
possibility that Toyota may buy the car back for a ‘fair’ scrap price, which should be higher than the
residual value after 8-10 years of use. Trade-in will be treated more favourably gaining greater discounts
on new models.
28.8 Public Relations
While the hybrid market is being entered with such glee by other manufacturers, the dividend of this is
they have same goal as Toyota, which is facilitating greater understanding of the benefits and needs of
hybrid technology. Much of this will be done through Press agentry and the provision of easily accessible
public information.
The in-house PR department will undertake all PR activities in order to keep the model brand values
coherent to the corporate brand and its core values. PR must be treated as a management function,
where it is not only the eyes and mouth of the company it should also be the ears. In correlating two-way
asymmetric and symmetric PR the department will be able to become more persuasive while being able to
modify Toyota’s corporate behaviour in order to seek public approval, awareness, trust and attitude
change. Toyota must monitor internet activity as well as carrying qualitative research to be able
understands the strengths and weaknesses of the car. The department must be reactionary to breaking
news stories and studies.
61
Fundamentally, unity in the messages emerging from Toyota is a key aspect. Where the message is
exacting and showing that it is the leading pack and that it has the lowest emissions. An important charge
of the PR department is to develop awareness of their corporate social responsibility programme (CSR). In
promoting an ecologically friendly car the CSR programme can be promoted creating synergies in the
campaign.
Press liaison will be critical at the launch of the model providing journalist with all the relevant information
and quotes. The launch in Seoul and Vienna will provide ample hype and photo opportunities, it will also
be here that press packs will be issued.
A global strategy that Toyota should be adopting especially through their PR program is to make hybrid
technology synonymous with their hybrid synergy drive. This in the future may offer Toyota a lucrative
licensing agreement, whereby it will be offered to emerging manufacturers or faltering manufacturers who
do not have the capacity to finance the research of the technology and its construction. This could allow
Toyota with hybrid synergy drive to become its Intel of the motoring world.
Press Releases will be issued throughout the year on the back of new developments or research and after
global motoring events that will take place during the campaign period.47
No additional money will be allocated to this department as it will be financed through usual budgetary
means rather than single model needs.
28.8.1 Press Cars
Ten cars will be made available for UK Press testing. More will be made available if required. Once the
cars are no longer required for testing, they will be used as test vehicles at Toyota Dealerships. Their
costs and the cost of other test cars will neither be included in the budget for the campaign neither will
their future sales count towards any revenues made.
Top Gear, Fifth gear and pulling power will all be invited to review the car. If the reviews are gained then
the in house PR agency must ensure that the Toyota Prius D3 is mentioned in all TV listing guides. Also a
E-Newsletter must be sent out to inform those on the list as to the time and date of the review being
aired.
47 See appendix XXII for Important PR dates.
62
Top gear will be a approached to include the Prius D3 into their section ‘a Star in a reasonably priced car’
or as it will be suggested ‘a Star in a low polluting hybrid car.’ This is unlikely to be accepted but if it were
it would show the car racing around a track, in other words it would show its real performance.
29.0 Performance Outcomes
A number of performance objectives were set out initially so that the campaign could be design around
achieving them. Conservative estimates of response rates have been set in order to provide a pessimistic
view of what is likely to occur.
In this simulation the following objectives were set
Communication tool Objective Performance (est.) Achieved PR Increase
understanding of the technology
To be evaluated through qualitative measures
Unknown
DM Achieve 53% of sales through corporate customers
1992 units or 53% Yes
3% through retentions
254 units or 6.75% Exceeded
44% through acquisition
1513 units or 40.25%
Advertising 80% awareness To be evaluated through quantitative research
Unknown
SP 8,000 test drives 8,982 test drives Exceeded Database 30,000 new entrants 25,221 Underperformed Business Sale of 3,750 vehicle 3,759 Exceeded
At the halfway point in this campaign performance will be assed, if it is deemed not to be on course to
meeting the targets set. Then it will be halted except for where media space has already been bought.
The campaign will only be continued once research is carried out to ascertain why the target market is not
reacting favourably to it.
Based on estimated outcomes of this campaign, its profitability is brought into question. Due to the low
operating margins (9.75% of Toyota48) it has been concluded that marketing expenditure will exceed
operating profit by £4,796,491. However, the numbers of cars sold during this campaign only relates to
the Prius D3 model being sold as a result. It is assumed that the Prius Petrol will also see a sharp increase
in sales as result of the campaign and that residual sales of the Prius D3 will occur after the campaign
ends. Furthermore, as the campaign was designed as a Toyota branding exercise other models should
benefit indirectly from this operation. 48 Google finance
63
Launches are an expensive investment but they should provide for continued sustained gains in the
future. More so that awareness has increased and corporate buyers should also make repeat purchases
once their Toyota Prius D3 needs to be renewed. Moreover, cross and up selling items have not been
included in the calculations and as such it is possible that the £4.7 million deficit over the lifetime of the
vehicle should be clawed back. In conclusion this campaign despite its initial losses will continue to reward
Toyota after it has run its course and should have established it as the leading hybrid technology
innovator.
30.0 Horizontal synergy
An important aspect to the success of this campaign is the relationships with dealers. It is through their
finale communication that a sale would be realised. Thus, the flow of information to the showrooms is
vital to ensure success. Their knowledge of the campaign structure and timings should aid their ability in
communicating the same message.
In employing similar imagery throughout the campaign and the leading ‘Dare to Drive’ slogan on all
advertisements, this should aid in tying the campaign together. In giving all communications a central
theme it should enable perspective customers to build a coherent image of the Toyota Prius D3 brand. It
is also thought that the other brands within Toyota portfolio will benefit from the extra Toyota exposure
and from Toyota being portrayed as a technologically advance brand.
The PR stage of this campaign will aim to educate, while advertising will stimulate desire and add brand
value. DM has been used to coordinate and measure responses while reinforcing all other communications
with further information. This approach should maximise impact and provide synergies.
64
31.0 Vertical integration
The campaign was created with two key aspects in mind, the business goals of Toyota (technologically
advanced and consumer/environmentally aware) would have to be reflected in the product and
subsequent advertisements. In combining these elements into the Prius D3 campaign it should enhance
overall performance.
The ‘Dare to drive’ slogan gives the car an edgy appeal something that is important in creating an
innovative and progressive brand.
The coordination of the campaign has been deliberate allowing for lead times to be established and each
task having a definite timeframe in which it must be completed. This will require regular meeting both pre
and post launch to ensure that account managers and department heads are fully aware of the stage of
campaign or its development they should be in. This should ensure exacting and unfaltering steps
throughout campaign ensuring it achieves the objectives set out.
65
Appendices
66
I. The Unions The power of the United Automobile Workers unions (UAW) in America can largely be blamed for
inflexibility of these corporations, from blocking the introduction of robots to creating a rigid workforce.
During the golden times, the UAW struck deals that would protect their members and secure those wages
and pensions that were reflective of the times. However, these ‘benefits’ have since become
unsustainable. There are some 2300 GM employees being paid to sit idly around for 8 hours a day all
because their contracts are such that they can not be released.49 American automobile manufactures are
losing money per unit rather profiteering on an industry where others continue grow and increase profits
year on year at the expense of them. As such the US manufactures are struggling with fighting off
bankruptcy, paying the ever increasing pensions and healthcare, while trying to maintain market share,
which is rapidly being lost to their Japanese and European counterparts. The UAW continued power and
ability to lobby government is still substantial causing the likes of Ford and according to some analyst, and
GM in particular to think about taking a Chapter 11 bankruptcy so that it can shrug off much of the
pension debt.
II. Governing Emissions: ‘Clean’ in California ‘Green’ everywhere else
In the wake of natural disasters such as the recent hurricane Katrina the Americans are slowly waking up
to the realisation that the environment matters. With this awakening a new dawn in energy technology is
emerging. The political arguments for this awakening are also gaining momentum, as the American
Government is trying to manage the hole in its finances which can largely be attributed to its foreign
policy, it would be able to save on importing (and subsiding) oil. Furthermore, they would be able to
decrease their dependency upon the Middle East.
California
California is seen as the axes of change in America and is said to have globally the some of the strictest
emission laws.
Advanced Technology Partial Zero Emission Vehicles (AT-PZEVs) is California’s special regulations
employed to reduce emissions further. This is the only Federal State where emission rules are strict and
the fuel that is burned is cleaner burning than petroleum in other states. New cars must meet California’s
strict pollution laws, which are the most stringent in the world. If they can meet California’s criterion then
the automobile should have no problem in being accepted as a ‘clean’ car.
49 http://www.mises.org/story/2124 Where Would General Motors Be Without the United Automobile Workers Union? by George Reisman
67
Attempts by the UK government to persuade motorist to go ‘green’
Tax credits – incentives
The Budget 2006 stated that on the main fuels there will be only an inflationary increase in tax. However,
the government is still committed to reducing pollution levels in the UK. For this to be done a long term
strategic approach has been adopted as not to have a detrimental effect on economic growth.
As stated in the annual Budget 2006 the government is having informal talks with the oil companies in
order to persuade them to produce and sell sulphur-free diesel and sulphur-free grades of ‘super’ petrol.
The government has given the oil companies some lead time to bring forward these fuels but does expect
it to reach forecourts at the beginning of 2007. The government is also supporting the biodiesel and
bioethanol with placing a fixed levy of 20 pence per litre until the end of 2009 giving this market time to
be established. It also cites the expansion of this market to 118 litres being sold (0.25% of fuel market).50
According to the government news network (GNN) the renewable transport fuel obligation (RTFO) are
going to operate a system of certificates, whereby the oil companies would demonstrate how much
biodiesel it sold. If the company was selling more than the 5% obligation set-out by the government, then
it would be allowed to sell on the certificates to companies who need more to meet the obligation.51 Thus
providing monetary benefits to those that strive to surpass the minimum level and therefore help to
establish the market quickly.
The DVLA also have their own incentives for consumers to turn to less polluting vehicles. The Graduated
Vehicle Excise Duty (GVED) measures the level of carbon dioxide in the emissions and taxes on that basis.
Diesel cars tend to do worse off in this test as they have more pollutants (but lower CO2 emissions),
however this is being continually reviewed and as diesel engines improve the level of duty being paid on
them should also decline. The government websites seem to be inconclusive as to the benefits of diesel,
with the DVLA sending out the message it is more pollutants (as seen by the higher road tax charges),
while at the same time they claim it has significantly less CO2 emissions.52
50 http://www.hm-treasury.gov.uk/media/20F/1D/bud06_ch7_161.pdf 51http://www.gnn.gov.uk/environment/fullDetail.asp?ReleaseID=177217&NewsAreaID=2&NavigatedFromDepartment=False 52 http://www.vcacarfueldata.org.uk/information/cars-and-fuel-options.asp
68
Table 27: Private Vehicles (registered on or after 1st March 2001)
Diesel Car TC 49
Petrol Car TC 48
Alternative Fuel Car TC 59
Bands CO2 Emission Figure (g/km) *
12 months rate £
6 months rate £
12 months rate £
6 months rate £
12 months rate £
6 months rate £
Band A Up to 100 0.00 - 0.00 - 0.00 - Band B 101 to 120 50.00 - 40.00 - 30.00 - Band C 121 - 150 110.00 60.50 100.00 55.00 90.00 49.50 Band D 151 - 165 135.00 74.25 125.00 68.75 115.00 63.25 Band E 166 - 185 160.00 88.00 150.00 82.50 140.00 77.00 Band F Over 185 195.00 107.25 190.00 104.50 180.00 99.00 Vehicles registered on or after 23rd March 2006
Band G Over 225 215.00 118.25 210.00 115.50 200.00 110.00
What the Commission for Integrated Transport think?
The Commission is an independent body which advises the Government on integrated transport policy and
is therefore an influential group who could change the future of the industry in the UK. Suggestions so far
are labelling cars according to their environmentally friendly status in order to inform and hopefully
change consumers behaviour to buy ‘greener’ cars. Since the suggestion a voluntary coding system is in
place for manufacturers to use. They are also suggesting Car Clubs and Car Sharing measures as a
method of reducing congestion. Another recommendation brought to the fore is charging for the amount
of the road used. In short, the Commission is advising on how to change travel habits. By promoting
more economical use of private cars and expanding the use of a public transport system, for which they
recommend higher investment.53 The Government, however, must balance the need to reduce congestion
without penalizing those least able to afford any ‘stick’ measure brought in.
Euro 5 emission standards
New automobiles that wish to be sold in Europe must from 2008 comply with the strict emission
regulations being placed upon them. Europe is placing special empathises on regulating nitrogen oxide,
carbon monoxide, hydrocarbons, oxides of nitrogen and particulate matter emissions. With all European
countries signatories to the 1998 Gothenburg protocol, which sets out reduction in emission targets that
must be met, it is in their interest to achieve these. As such governments are offering tax incentives,
Germany for example has a tax exemption of 600 € in place for new diesel vehicles with particle emissions
under 0.0085g/km.54
53 http://www.cfit.gov.uk/ 54 http://www.euractiv.com/Article?tcmuri=tcm:29-133325-16&type=LinksDossier&_print
69
III. Problems with acquisitions and mergers
The DaimlerChrysler merger was thwarted with costs and incompatibility of management styles. Only now
is it seeing the benefits of the merger which took place in 1998. Through having greater volume sales and
one headquarter they are able to spread the expensive technological development cost over the group’s
portfolio. To get to this point the company had to go through much anguish including shedding 45,000
jobs.55
America’s largest two are having considerable financial difficulties with GM and Ford reporting combined
losses of $7.2bn in their North American businesses in 2006 (FT: Motor Industry 2006) and job losses are
to follow these announcements.56 Even the European Manufacturers are decreasing their overall salary
burden by shedding jobs. It is reported that VW is threatening 20,000 job losses in Germany
(AID:0604:p8). GM, DaimlerChrysler are also looking into other options to cut costs and that is by selling-
off brands. GM severed links with Fiat as the alliance looked to be too costly for both brands and
DaimlerChrysler has their much troubled Smart car up for sale.
IV. Shorter lifecycles
According to Bob Lutz at GM it takes 36 months for a new car to get into the showrooms as stated in the
(Economist: Survey: Car Industry: Fighting Back, 2nd September 2004) it goes on to say that car makers
are being pressured by market forces to update their models every year. This is a far cry from the 7 year
average lifespan that was once found in Europe, major players are now keeping to the 3 year cycle. In
Japan, Toyota has had the fortune of having very selective customers who expect revamped models every
year, thus they do not have to change their business model to achieve this.
55 This took considerable negotiations with the powerful union (UAW) 56
Much of the financial difficulties facing Ford and GM can be laid at the door of deals made with the UAW in the 1970s. (see section The Unions)
70
V. What marketing has been able to do for Toyota
A summery of New York American Association (NYAA) (2005), Toyota: “Fuel for Thought” marketing
campaign in Chicago (USA). Agency: Saatchi & Saatchi. Found on www.warc.com
Chicago is a highly competitive region for automobile manufacturers. The domestic players had all been
seducing customers with discounts and incentives. However, and somewhat wisely in hindsight Toyota
decided upon an aggressive marking stance instead of continuing with incentives. As incentives according
to NYAA report devalued brand image and affected residual value. Also long term these discounts are
expected by consumers which does not allow manufactures to return to higher margins.
The campaign ran over 2004 and its objectives were to increase sales over previous year, assist to grow
overall market share, improve segment penetration for core models and aid dealers’ profitability.
Through market research of this region, it was found that “that once a Toyota model was on a consumer's
shopping list, it remained there until the purchase decision was made over 70% of the time” and key
issues that consumers valued included “Quality, Safety, Cost-of-Ownership, Product Selection, and
Innovation.” Within these two findings it was found that to get on the consumers precious ‘shopping list’
they would have to meet some if not all of things that consumers valued. The agency looked towards
Toyota’s heritage and core values and came up with a message strategy of quality-durability-reliability.
The agency then took the decision to run an unconventional campaign of testimonials to communicate the
message, with the final words of ‘fuel for thought’ as the copy.
Using traditional media (TV, Radio, Newspaper) to carry the message the campaign was seen as a
success. Toyota claimed that it was their best year in the 25 year history of operating in that region.
Additionally, all of the campaign objectives were met in particular the profitability of dealers, which
importantly shows that without using any increased incentives on the year before their margins were
better. Therefore, it can be concluded that the ‘value’ message of the Toyota brand had been delivered to
the public.
71
VI. Corporate Culture
In order to achieve the mantra set-out by Taiichi Ohno, Toyota has built a homogenous corporate culture
and a philosophy that has become deep-rooted in every Toyota employee. In ensuring that complacency
is avoided and set goals are surpassed, which facilitates the constant and continued improvement that
leads ultimately to growth. This is stark contrast to their seemingly sluggish and overpopulated American
counterparts, whose unionised workforce has hampered relationships.
To cultivate the learning process, Toyota has established an operations management consulting division
(OMCD) and the Toyota institute, where managers are trained to Toyota’s standards, and techniques are
taught to preserve the philosophy so that through globalisation it is not lost, and they are also taught to
manage suppliers. It is the relationships with suppliers that keep Toyota operationally competitive and
helps achieve just-in-time deliveries.
Management is largely comprised of engineers with experience at the production level who have a
profound understanding of the production process and empathy with employees, which enables
information to flow from bottom to top, guaranteeing responsiveness and improvement. The ‘Toyota way’
is striving for perfection.
72
Figure 11: Guiding Principles and Values
Source: own adaptation of guiding principles http://www.toyota.co.jp/en/vision/philosophy/
VII. Toyota ‘Green’ methods
Toyota is well known for its production techniques it has developed business practices which have been
admired by academics and impressed the business world. From conceptualising just-in-time production
methods and extending these to TPS, Toyota has also moved further. In southern California they have
built a ‘Green Complex’ which is made from 95% recycled content and uses solar panels to power the
plant. Another two manufacturing plants have been designed as zero landfill producing operations.
Toyota realises that for automobiles to continue to play an important part in the everyday lives of billions
of people it must operate in an environmentally friendly way. As such it has laid down its own rules about
how it wishes to protect the environment.
In their quest to be ‘global environmental leader in both product and manufacturing processing’ Toyota is
also requiring direct and indirect suppliers to follow and adopt their Earth Charter.
Toyota has also introduced what it calls Eco-Vehicle Assessment System (Eco-VAS), which measures the
vehicles environmental impact over its life.
Pursue growth in harmony with the
global community
through innovation
Foster a Corporate culture
that enhances relationships throughout
the company
Provide and develop
outstanding products that
fulfil the needs of customers
Provide clean safe products
which enhance quality
of life everywhere
Respect culture and
custom. Act with corporate social
responsibility
Be a good corporate
citizen of the world
Create stable business
partnerships to achieve
mutual growth
Guiding principles
73
Figure 12: Earth Charter
Source: http://www.toyota.co.jp/en/environment/plan/ In taking up this code of conduct, Toyota’s automobiles must reflect it. As such greater investment into
environmentally friendlier cars is in line with its charter and remit.
74
VIII. Strategic Position
Figure 13: The Toyota Strategy Clock
‘A hybrid strategy aims to achieve differentiation from competing products, while charging lower prices.’ Toyota has managed to do this repeatedly due largely to the fact that they have a lower cost base than others in their strategic group.
Figure 14: Strategic Groups
REGIONALLY FOCUSED, BROAD-LINE PRODUCERS e.g. Fiat, PSA, Renault, Chrysler
NATIONALLY FOCUSED, INTERMEDIATE LINE, e.g. Tofas, Kia, Vaz, Maruti
NATIONALLY FOCUSED, SMALL, SPECAILIST PRODUCERS e.g. Bristol(UK), Classic Roadsters (US), Morgan (UK)
GLOBAL, BROAD-LINE PRODUCERS e.g. GM, Ford, Toyota, Nissan, Honda, VW
GLOBAL SUPPLIERS OF NARROW MODEL RANGE e.g. Volvo, Subaru, Isuzu, Suzuki, Saab, Hyundai
LUXUARY CAR MANUFACTURERS e.g. Jaguar, Rolls Royce, Daimler-Benz, BMW, Lexus
PERFORMANCE CAR PRODUCERS e.g. Porsche, Maserati, Lotus
National GEOGRAPHIC SCOPE Global
Narrow
PRODUCT RANGE
Broad
Source: Own adaptation from Grant, R. (2002): Contemporary Strategy Analysis, 4th Edition, Blackwell
1
No Frills
2
Low
Price
3
Hybrid
Differentiation
4 Focused
Differentiation
5
6
7
8
6, 7 & 8: Strategies
Destined for Ultimate
Failure
Low
Low
Price High
High
Per
ceiv
ed U
se V
alu
e
Source: Haberberg, Adrian; Rieple, Alison (2001): The Strategic Management of Organisations; Great Britain: Prentice Hall, Financial Times; page 191
75
IX. Toyota’s Distinctiveness
Interrelationships with suppliers and the ability to gain all required parts at ‘fair’ price has been the
cornerstone of success for Toyota. Their suppliers are working to the Toyota ethos, implementing similar
business practices (even complying with the Environment Charter) while ensuring they deliver Toyota
quality products. The main advantage of harmonious linkages with suppliers is that outsourcing reduces
setup costs, increases flexibility, allows Toyota to reap the benefits of their supplier’s capabilities and
knowledge, and the suppliers economies of scale and scope can be capitalised upon. Cross-holdings in
suppliers and sharing a management resource and knowledge pool further deepen the interdependency
and bonds of trust. It is this trust and the relationships that stem from it which can not be copied.
The benefits gained through their linkages with suppliers are not restricted to the manufacturing process
but they also permeate product design and development. By integrating suppliers into R&D, Toyota can
on the one hand ensure feasibility of new designs and on the other hand reduce costs by eliminating
duplication. Both these benefits allow new models to be brought to market faster and through the set-
based concurrent engineering (SBCE). Toyota can also ensure it can keep cost even lower by using many
of the unseen parts from old models, which also allows them to be more customer responsive.
X. Sources of fuel for automobiles
Automobile fuel sources and technology are becoming varied and more advanced causing fragmentation
in the industry to occur. The technological changes in the past decade will be merely a small reflection of
what will likely happen in the next decade. For manufactures, they must either anticipate consumer
wishes and pander to them, or lead development and try the build the framework in which they and
others must operate to be competitive. Alternatively they could take a passive approach and make
changes only when absolutely necessary (and of course not wasting billions of dollars in developing the
engine fuel type that does not eventually win through).
Petrol and diesel are the forerunners for fuel in cars today and while not about to run out in the next 25
years it is still becoming less desirable. With the price of oil reaching new highs on the world market ($75
a barrel)57 and uncertainty of whether this will continue to rise or abate. Consumers are looking to seeking
cheaper more economical forms of transportation. For manufacturers this means producing more efficient
cars and/or less oil dependent automobiles.
57 Price at the time of writing
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Hydrogen is largely seen as the ‘holy grail’ of fuel due to its abundance. However, it will remain a power
source that is commercially unviable for at least the next decade. This is conclusion is largely drawn from
the fact that production is currently low and expensive. Furthermore, storage of hydrogen is particularly
difficult and the cost of implementing a distribution network will just act as a further barrier, raising the
costs above that of conventional fuel (even with further oil price increases).
Ethanol fuel mixes, while has many fans is fuel is being discounted by this report as in short term the cost
savings to motorist are not apparent. While it cost less per gallon ($2.40) compared to petrol ($2.80) the
fuel is less efficient meaning a lower miles per gallon (Newman 2006: Ethanol explained, US News)58. In
addition to this the distribution infrastructure would have to be developed and this is not in control of one
company alone.
Consumers are unlikely to be willing to travel large distances just to refill their car, after current spread of
petrol stations being wide and convenient. For these reasons the only viable option in the near future are
that of hybrids
Hybrid Technology
Hybrid power: A multiple source propulsion system that uses a combination of energy to supply (in
vehicles) an engine. The most common amalgamation is that of the currently very successful internal
combustion engine and an electric engine.
Two manufactures in particular can be currently identified as leaders in the industry. Honda and Toyota
have both developed roadworthy cars, which are impacting on the market place, last year hybrids
accounted for 1% of market share in America (FT: Motor Industry: p2). The Prius was launched in the
USA in 2000, making it the first hybrid to enter the market. Having caught the attention of celebrities in
Hollywood the technology was boosted with ‘cool’ status. The Prius was and still is a car which has been
brought to market through a highly successful editorially driven PR communication strategy. And winning
awards such as ‘car of the year’ from Motor Trend Magazine and the North American Auto Show shows
how it has been able to capitalize on press agentry.
Toyota calls its hybrid technology, Hybrid Synergy Drive™ and Honda terms it Integrated Motor Assist, but
both amount to the same thing. A new market segment.
58 http://www.usnews.com/usnews/biztech/articles/060425/25ethanol_faq.htm?s_cid=rss:site1
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Hybrid Synergy Drive™ means that engine can be powered by gas, electric, diesel or petrol, alternatively it
can operate a combination of systems simultaneously. Currently, only petrol hybrids have made it to
market place. The reasoning behind this could possibly lay on the fact that Diesel is an unpopular fuel
outside Europe. However, hybrid diesel may gain popularity when the efficiency and cost saving are seen.
Toyota is putting much behind the development of hybrid technology and has said (on the corporate
website) it hopes to produce 1 million hybrid vehicles a year in 2010. And with the Prius sales continuing
to climb this number looks to be attainable. It is also helping them achieve their goals in line with their
Earth Charter. Although, they will have contend with a reduction of subsidies in the USA, which will mean
that their price in relation to petrol vehicles will become less competitive. In the UK, some mediocre
government incentives do exists for environmentally friendly cars, with cheaper road tax and no
congestion charge payable in London. How much of this is a real incentive for conversion is debatable, the
more promising force for change is consumers desire to pay less at the pump.
Diesel Hybrid
While the Japanese have inspired the petrol-hybrid combination, French vehicle manufacturer PSA
(Peugeot-Citroen) are taking it in a new direction. The diesel-hybrid “is some 25% better [more efficient]
than a similar vehicle equipped with a petrol hybrid system” according to the PSA hybrid vehicle project
manager, Alain Klein. PSA are claiming fuel efficiency of 83mpg, which is above the 60mpg claimed by the
Prius (the experience of users is that the actual mpg is far less approx. 40mpg). PSA are looking at a
market entry date of spring 2010 as the costs of production need to be lowered before it can be a
competitive.
This report proposes the launch of a similar automobile which is powered by a diesel fuel cell mix. The
attractiveness of using diesel as a fuel is that in terms of miles per gallon (mpg) it will far exceed that of a
petrol engine, something that consumers should desire in a climate of high oil prices. Diesel cars have also
the opportunity to use biodiesel. It is seen by the government as a feasible solution to reducing emissions
and already there is already a minor distribution network in place which is set to grow with demand. Even
large players like Tesco have 23 forecourts where biodiesel is sold.59 There has also been a large increase
in agricultural land which has been devoted to growing oil seed rape (the fuel crop).60 So signs suggest
59 http://driving.timesonline.co.uk/article/0,,22749-1853984,00.html 60 http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/4249962.stm
78
this is strategically the most fitting and viable options. Especially as consumers will be paying less as they
are getting more mile per gallon.
This option should also go some way in combating proactive competitors such as Mercedes, who have not
been sitting idly by waiting for the hybrid revolution. As Schmidt (AID:0601: p1) writes it “has developed
its novel ‘BLUETECH’ diesels to upstage these petrol-hybrids both on the fuel economy and increasingly
vital cost side”. The BLUETECH car is due to be released in autumn 2006. With cars such as this making
their way into the market the consumer like never before are getting a choice as to what will power their
cars.
XI. Fleet Services
In the UK, the Fleet market was worth £11.8 bn in 2004 and with only a small (2%) decline projected for
2005, this market can not be ignored (Mintel 2005). The major players in this industry are Vauxhall and
Ford both having 20% of the market each. Conversely, Toyota only has a 4% market share. However, like
in the consumer market the potential to grow due congestion charging and other emission based taxes is
very real. Fleet cars are also well known for there use of diesel due to their lower running cost making the
hybrid diesel even more attractive. As with the consumer market it is susceptible to economic changes
and a downturn would drastically reduce the market place. However, companies still have the ability
during these times to turn to financing and leasing which aids in reducing initial impacting costs, and for
manufacturers this is in the long term highly lucrative.
XII. Consumers Hybrid Perceptions and myths
Honda commissioned TNS to do research on British driver’s attitude towards the environment and their
understanding of alternative fuel vehicles. In a survey of 1,200 motorist, the results showed that 51%
were not even aware of hybrid cars. Of those that said they knew of hybrids more than 40% were
unaware that it uses both electric and petrol. This seems to suggest that the marketing efforts of Toyota
and Honda (the two suppliers of hybrids) have been lacking in their effectiveness. From the 18% who
would consider a hybrid, the top motivating factor was lower fuel cost (54%) rather than the
environmental benefits (39%). This type of research reinforces the potential for diesel hybrids, as their
main benefit is fuel consumption. There is also some environmental benefit although against other
alternative fuels.
79
Figure 15:Propulsion technology awareness (2004)
100% 100%
18% 17%
29%32%
42%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Petrol Diesel Gas Electric Solar Hydrogen Hybrid
Source: ESMAR: The Positioning of Green Technology (March 2004)
In January 2006 Business Week published a top 10 hybrid myth list which shows certain aspects that
which needs to be overcome if the hybrid technology is to become widely accepted. Many of these myths
will wane with the rise of more manufacturers entering the market place with their own hybrid
technology; however this will take some time.
The top 10 myths:61
1. You need to plug a hybrid in 2. Hybrid Batteries need to be replaced 3. Hybrids are a new phenomenon 4. People buy hybrids only to save money on fuel 5. Hybrids are expensive 6. Hybrids are small and underpowered 7. Only liberals buy hybrids 8. Hybrids will pose a threat to first responders (emergency services) 9. Hybrid will solve all our transport, energy and environmental problems 10. Hybrid technology is only a fad
Of these myths 1, 2, 6 and 10 are the most important to dismiss. Myth 1 and 6 shows the level of
ignorance of consumers as to what this technology is really about. Point 6 is reflective of what the
perception of diesel power was and what it continues to suffer among the older generations especially.
61 http://www.businessweek.com/autos/content/jan2006/bw20060131_870391.htm
80
Diesel perceptions
In Europe, over the last 2 decades, diesels have gone through a radical perception change. From being a
noisy, slow, vibrating and having high a wearing rate, consumers are now seeing them as a viable if not
superior alternative to petrol. Much is being done to erode the old perception, from Audi winning La Mans
in 2006 with a diesel engine to adverts featuring diesels cars, with consumers little realising that diesel
cars are being used.
Honda is continually trying to increase consumer’s acceptance of diesel with their advertisement: HATE
Ad storyline
Different animals in nature are taking out their frustrations at the unhealthy Diesel Engines, rabbits shoot
arrows at them, goats rams them and penguins on a see-saw are smashing it mallets, however when the
new Honda Diesel i-CTDi engine is release they leave it alone
Creative agency Wieden & Kennedy
Increasingly, the old image of underpowered and noisy is being eroded from the consumers’ inferences.
This is being replaced with an image of fuel efficiency and performance which is close to that of petrol.
Consumers are obviously not being put off by the higher price of diesel at the pump in the UK market as is
evident by the surging demand for diesel cars.
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XIII. The Toyota Range
Model Price Range Body style Model in the range
Avensis £13,995 - £23,150 Estate / Hatchback / Saloon
52
Avensis Verso £18,600 - £22,100 People Carrier 6
Aygo £6,745 - £7,995 Hatchback
6
Celica £16,650 - £22,595 Coupe 10
Corolla £10,995 - £16,000 Estate / Hatchback / Saloon
39
Corolla Verso £14,500 - £19,795 People Carrier 7
Land Cruiser £27,000 - £37,900 4 X 4 6
Land Cruiser Amazon
£45,580 - £48,175 4 X 4 3
MR2 £17,150 - £18,000 Convertible 2
Previa £20,405 - £24,955 People Carrier 6
Prius £17,545 - £20,045 Hatchback
3
RAV4 £17,250 - £24,450 4 X 4 12
Yaris £7,295 - £12,845 Hatchback 19
Yaris Verso £10,945 - £12,645 People Carrier 3
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The Prius already occupies the higher end price rage of what fleet purchasers are expecting to pay. A
similar target audience is being aimed at as the Prius. It is thought that it is this demographic is the only
group who will possess attitude and inclination of environmentally friendly.
The Prius is currently being aimed at the 30 – 60 year old males and females, who come from the AB
class, as this car does cost a premium above similar size and classified cars. Paying to be ‘green’.
XIV. London Motor Show interview and findings
The interview was not audibly recorded so this a paraphrase of the discussion with the most important points noted. Honda Spokesperson Question: What would be the demographics of a customer of this car (Honda Civic Hybrid)? ‘We do not talk about demographics when trying to target a car, it’s all about psychographics’… The spokes person then retorted the question back me…After explaining that I had little understanding (at that point) about the particular model I offered the answer that hybrids in general despite their technological excellence seem to luring and middle aged audience (the type that would not know how to programme a VCR). H Spokesperson ‘I agree, we don’t sell this car as you would sell a computer but more on what the technology can do. In this case, a car which produces fewer emissions than an ordinary petrol engine’ Question: Would a hybrid be made for a younger target market, an example being first timer buyers (18+)? HSP Quote “No. All they want is 6995 on the road including insurance”… ‘they simply don’t care about emissions and they certainly don’t have the money… This technology is expensive’ Question: why is Honda not making a diesel hybrid? HSP ‘Talk to our R&D people…All I can say is that hybrids are seen as a short term solution, fuel cell will be next and then ultimately hydrogen’ Question: Surely diesel hybrids would have a higher mpg? HSP ‘Would they? That maybe true but here at Honda we believe that petrol is a far cleaner solution’ Question: By cleaner I suggest that you mean the emissions other than CO2, which is they current measurement for pollutants in the UK? HSP ‘Yes, but I also believe that it is only a matter of time before these the emissions measurements will include more stringent testing of other emissions, we only have to look to Germany for the future of a emissions testing standard.’ While emissions measurements may become more stringent this should have no adverse effect on diesel engines fitted with particle filters.
83
Toyota interview Question: why would people buy a hybrid when the fuel savings are little more than a diesel of a VW Golf or Ford Focus? TSP ‘it is the concept that people like, when you explain about the electric motor switching on when low speeds are being done people feel that is an excellent idea’ Question: who at the show is taking particular interest? TSP ‘everyone walking pass always stop to look at the Prius show’ the Prius show being the Prius reverse parking automatically without the aid of a driver. Observation: People did look on in awe at the Prius reversing and it was an impressive sight, not least because the car was not making a noise. Question: how would you describe the car? TSP ‘it’s a smart car, intelligent one of the first that is drive by wire…Not only that but it’s a quality car that is also comfortable’ Question: Do you have problems with people not really understanding the concept? TSP ‘it’s getting better, but there are still some that ask whether you have to plug the car in. When you tell them they don’t and tell them how it really works they come onboard’ TSP ‘clearly there is some issue with people feeling that maintenance costs will be high. The reality is that this car will be serviced in exactly the same way as any other car and the cost of that is no difference than an ordinary car’ ‘Plus the 8 year warranty does provide extra comfort’ Question: What about the battery issue, what happens after the 8 years, how much does it cost to replace? TSP ‘I’m not sure about the cost but what I can tell you is that the batteries have been extensively tested, and as yet we have seen no problems with them. The battery will do at least two hundred thousand miles. The technology behind them makes them very different to other batteries’ Interview with a Car sales man at the official Toyota Dealer (Jemca, Croydon) Similar questions were asked as those at the motor and similar answers were given as to type of buyer. However, the most interesting piece of information gleamed from the sales man was that once a car was tested a conversion of between 5% to 20% could occur.
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XV. Estimated UK population by social grading 2005
Population by demographics All adults
15+ Men Women
Total population 47,771 23,150 24,621 Profile 100% 100% 100% A 1,818,000 943,000 875,000 Profile 3.80% 4.10% 3.60% B 10,552,000 5,336,000 5,216,000 Profile 22.10% 23.10% 21.20% C1 1,380,000 6,341,000 7,459,000 Profile 28.90% 27.40% 30.30% C2 9,844,000 5,312,000 4,532,000 Profile 20.6 22.9 18.4 Source: National Readership Survey, January-December 2005.
UK estimated population by age range (14+) 2004 est 14-24 7,626,000 16% 25-34 7,939,000 16% 35-44 9,132,000 19% 24-54 7,633,000 16% 55-64 6,905,000 14%
48%
65+ 9,577,000 20% 48,812,000 100% Source: Mintel 2004
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XVI. Hybrid Costs and Savings Comparisons
Fuel Costs
For the simplicity of the calculations all figures will be based on an English/European metric system. This avoids conversion confusion and loss of information. Calculations based on a corporate car travelling 32,200 km per year (20,000 miles) Average unleaded petrol price per litre = 98.4p Average unleaded petrol price per litre = 99.6p Prices sourced from www.petrolprices.com 24th July 2006 Average fuel consumption per litre varies depending on source. Source used www.autobytel.co.uk Make and Model Fuel
Type Cost of the Car
Fuel economy
Litres required
Total annual fuel costs
Diesel fuel saving
Ford Fiesta hatchback 1.6 Ghia 5dr
Petrol £12,545 15.61 km/l (44.1 mpg)
2,962.78 £2,054
Ford Fiesta hatchback 1.6 TDCi Ghia 5dr
Diesel £13,110
22.73 km/l (64.2 mpg)
1,416.63 £1,394
£660
Renault Megane hatchback1.6 VVT Privilege
Petrol £14,970 14.48 km/l (40.9 mpg)
2,223.76 £2,188
Renault Megane hatchback 1.5 dCi 106 Privilege 5dr
Diesel £16,030 21.27 km/l (60.1 mpg)
1,513.87 £1,508
£680
Volkswagen Golf hatchback 1.6 SE FSI 5dr
Petrol £15,375 14.30 km/l (40.4 mpg)
2,251.75 £2,215
Volkswagen Golf hatchback 1.9 SE TDI 5dr
Diesel £16,265
18.87 km/l (53.3 mpg)
1,706.41 £1,700
£515
Ford Mondeo saloon, 2.2 16V TDCi 155
Diesel £22,795 16.63 km/l (46.3 mpg)
1,936.25 £1,928
Toyota Prius hatchback 1.5 VVTi T4 Hybrid 5dr CVT Auto
Petrol hybrid
£18,580 23.26 km/l (65.7 mpg)
1,384.35 £1,362
New Prius D3 Diesel Hybrid
£22,000 31.85 km/l (90 mpg)*
1,010.99 £1,007
£355
*Based on a 38% fuel economy increase when switching to diesel
The Prius D3 Hybrid must achieve a high fuel saving cost above its petrol counterpart if it is worthwhile for
the consumer to pay the premium placed upon it.
86
In terms of fuel saving the Prius D3 will save the driver in excess of £350 per annum over the current
Prius. If it is compared to a similar car using just a petrol engine, for example the Renault Megane the
savings are even more substantial, an incredible £1,180 for a petrol engine or £500 for a diesel. The lower
road tax will not concern customers of new cars as it is such a small fraction of overall costs. However,
substantial savings can be made for those that continually drive into the Congestion Charge Zone in
London (other cities are debating similar congestion charging). At a current cost of £8 per day in a 48
week working year this would summate to £1,920.
Cumulative costs of fuel and Congestion Charge Make/Model Purchase
cost Year 1 Year 2 Year 3 Year 4
Non London
Ford Focus Petrol 12,550 14,600 16,650 18,700 20,750
London 12,550 16,520 20,490 24,460 28,430 Non London
Renault Megane Diesel
16,000 17,500 19,000 20,500 22,000
London 16,000 19,420 22,840 26,260 29,680 Non London
Ford Mondeo Diesel 22,750 24,680 26,600 28,530 30,462
London 22,750 26,600 30,445 34,290 38,140 London Prius D3 22,000 23,000 24,000 25,000 26,000 Based on 20,000 miles driven each year
For a fleet buyer these savings begin to mount and the extra cost of the automobile diminishes making
the Prius D3 increasingly more viable in pure monetary terms. The cachet that can be added to their own
brand by owning a fleet of cars that are environmentally friendly should also pay dividend. Furthermore,
fleet buyers must consider the extra company car tax payable.
BIK company car tax
Current Prius CO2 emissions are at 104g/km 2007/8 percentage charge is 12% giving a Benefit in Kind charge of £2,125 falling to £1,771 for the year 2008/9. Employee Tax payable at 22% = £468 or £390 in 2008/9 Employee Tax payable at 40% = £850 or £708 in 2008/9 With CO2 emissions forecasted to be 100g/km or lower the BIK tax is likely to be lower than the current Prius charges. If the diesel engine achieves a Euro 4 emission rating it will be exempt from the (3%) surcharge.
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If this is compared to a: Ford Mondeo saloon, 2.2 16V TDCi 155 Ghia X SIV Price of £22,000 2007/8 percentage charge is 22% giving a Benefit in Kind charge of £4,801 rising to £5,019 for the year 2008/9. Tax payable at 22% = £1,056 or £1,104 in 2008/9 Tax payable at 40% = £1,920 or £2,008 in 2008/9 Including initial BIK tax charges for 2008/9
Make/Model Purchase cost
Year 1 Year 2 Year 3 Year 4
Non London
Ford Mondeo Diesel 27,770 29,700 31,620 33,550 35,480
London 27,770 31,620 36,640 39,310 43,160 London Prius D3 23,780 24,780 25,780 26,780 27,780
Savings can be considerable in this example, after 3 years a company could save £6,770 (or £12,530 if
driving through the congestion charge zone). Multiply these savings by a large fleet and the monetary
savings could seriously reduce cost, while not having to compromise on size.
Not only will savings be made through company car tax but also the Prius features in a far lower insurance
group (currently 7E, as opposed to 13A), potentially saving hundreds of pounds per insurance package.
Hybrid batteries and depreciation
Toyota claims that it is very possible that the battery could last for the entire life of the Prius (10 years or
more). If this is true then people’s apprehension is unjustified. Furthermore, as the hybrid market is
developed then the price of the battery will fall, not only that but it is plausible that the technology will
improve vastly over the currently types. As such the replacement of a battery could mean making the car
more fuel efficient as the battery could take more load. Therefore, bringing a new lease of life to the
automobile, this would have a radical impact on the depreciation rate of a hybrid. It is for this reason that
depreciation rates are difficult to quantify. Unlike conventional fuelled cars these are still relatively new
and those that are going to the second hand market are few and far between (creating disproportionate
supply to demand). Currently, it is documented that the Prius is holding its value to upwards of 5% on
similar sized comparable models and even if the future hybrids depreciate at a similar rate to other
automobiles, the would involve no more ‘risk’ as an investment.
It is reasoned that Toyota will also takeover the disposal of corporate cars.
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XVII. Consumer interests
Q1) The Functionality question: Consumers level of agreement with the statement ‘my car is the only there to get me from A to B’ Q1 Importance
Rank 2003 (%)
Overall score
Definitely agree 2 13 26 Tend to agree 1 25 25 Neither agree nor disagree 0 12 0 Tend to disagree -1 16 -16 Definitely disagree -2 7 -14 Final total 21 Q2) The ‘Looks’ question: Consumers levels of agreement with the statement ‘I would choose a car mainly on the basis of its looks’ Q2 Importance
Rank 2003 (%)
Overall score
Definitely agree 2 3 6 Tend to agree 1 14 14 Neither agree nor disagree 0 18 0 Tend to disagree -1 29 -29 Definitely disagree -2 20 -40 Final total -49 Q3) Safety: Consumers levels of agreement with the statement ‘My car should be equipped with all possible safety features’ Q3 Importance
Rank 2003 (%)
Overall score
Definitely agree 2 18 36 Tend to agree 1 39 39 Neither agree nor disagree 0 15 0 Tend to disagree -1 3 -3 Definitely disagree -2 1 -2 Final total 70 Q4) Comfort: Consumers levels of agreement with the statement ‘Comfort is the most important thing in a car’ Q4 Importance
Rank 2003 (%)
Overall score
Definitely agree 2 6 12 Tend to agree 1 22 22 Neither agree nor disagree 0 28 0 Tend to disagree -1 20 -20 Definitely disagree -2 6 -12 Final total 2
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XVIII. Past and Present Campaigns for the Toyota Prius
Figure 16: Previous Prius advertisement used by Toyota UK.
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Figure 17: Current Campaign
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XIX. Screen Shots of online request forms
Figure 18: Brochure Request
Figure 19: E Brochure Request
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Figure 20: E-Newsletter
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XX. Readership breakdown including rates.
Daily National Papers Readership
Dailies Express Daily Mail Guardian Independent Telegraph Times Financial Times
Page, ROP, Full Colour
31,500.00 47,124.00 18,000.00 22,000.00 59,000.00 25,900.00 61,200.00
NRS (Adults) Dec 05 - May 06
1,777,000 5,312,000 1,276,000 809,000 2,012,000 1,892,000 347,000
Men 50 45 60 56 52 57 71 Women 50 55 40 44 48 43 29 35-44 15 16 18 19 13 18 30
45-54 16 18 19 22 14 16 20
55-64 20 21 17 14 22 18 13
65+ 30 28 15 11 37 19 8 A 3 5 11 11 15 14 17
B 23 25 49 42 44 46 49
C1 34 35 29 32 29 29 26 Source: Meidatel.co.uk
Sunday Papers
Sundays Sunday Express
Mail on Sunday
Observer Independent Telegraph Times
Page, ROP, Full Colour (£)
40,725.00 51,000.00 22,000.00 22,000.00 42,000.00 85,750.00
NRS (Adults) Dec 05 - May 06
2,063,000 6,136,000 1,478,000 826,000 1,896,000 3,495,000
Men 50 46 55 54 54 53 Women 50 54 45 46 46 47 35-44 15 19 21 23 14 22
45-54 16 19 17 13 15 20
55-64 20 20 16 17 19 18
65+ 27 21 12 8 33 13 A 3 4 10 10 13 13
B 24 27 48 40 40 47
C1 35 34 29 28 32 26 Source: Mediatel.co.uk
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XXI. Media Schedule Apr May June July Aug Sept Oct Nov Dec Jan
4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 National Newspapers
Express x x x x x x x x
Sunday Express x x x x
Daily Mail xxx xxx xxx xxx Sunday Mail x x x x x x x x
Guardian x x x x x x x x x x x x x x x x x x x x x
Observer x x x x x x x x x x x x
Independent xx xx x x x xx x xx
Independent on Sunday x x x xx x x x x x x
Telegraph x xx x x x x x x x
Sunday Telegraph x
Times x x xx x x x x xx x x
Sunday Times x x x x x x x x x x
Financial Times x xx xx xx xx x
Evening Standard x xx x xx xx xx xx
TV Commercials ITV1 x x x x x x x x x x x x x x x x
Channel 4 x x x x x x x x x x x x x x x x Billboards
London x x x x National x x x x
Bus Wrap x x x x x x x x x x x x x x DM Newsletter x x Retention x x x x Acquisition x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x Corporate x x x x
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XXII. PR important dates
Date Event Location Organiser 7 - 8 February 2007 Hybrid Vehicle
Technologies Symposium
California, United States
SAE International
6 - 15 April 2007 Seoul Motor Show 2007 - Worldwide launch to happen here
Seoul, Korea Organizing Committee for Seoul Motor Show
26 - 27 April 2007 28th International Vienna Motor Symposium -European Launch
Vienna, Austria
ÖVK
12 - 14 September 2007 CVT - HYBRID 2007 Yokohama, International Congress on Continuously Variable and Hybrid Transmissions
Yokohama, Japan JSAE
11 - 12 December 2007 Internal Combustion Engine: Performance, Fuel Economy and Emissions
London, United Kingdom
IMechE
PR Press Releases to be made after each of these events
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XXIII: Profit and Loss statement
Revenue
Vehicles sales (avg. £22000 per unit)
£ 82,698,000
Operating margin (9.15%) £ 7,566,867
Expenditure
Advertising
Press £ 5,265,696
Television £ 5,262,112
Bus wraps £ 877,120
Billboards £ 466,500
Sales Promotion
Prize Draw £ 6,000
DVD £ 296,750
Direct Mail
1st step Retention £ 31,971
2nd step Retention £ 88,204
Acquisition £ 44,880
Corporate Acquisition £ 24,125
PR £ -
Total costs £ 12,363,358
Campaign Operating profit -£ 4,796,491
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References
Books
Grant, R. (2002): Contemporary Strategy Analysis, 4th Edition, Blackwell Haberberg, Adrian; Rieple, Alison (2001): The Strategic Management of Organisations; Great Britain: Prentice Hall, Financial Times; page 191
Electronic Source
http://www.autobytel.co.uk
http://auto.consumerguide.com/Articles/ http://abcnews.go.com/WNT/Autos/story?id=1533901
http://www.bvrla.co.uk/public/The_BVRLA/What_is_the_BVRLA.cfm
http://www.cfit.gov.uk/ http://www.clearchannel.co.uk/billboards/ratecards/national/
http://www.consumeraffairs.com/news04/2006/05/cr_gas_prices.html http://driving.timesonline.co.uk/article/0,,22749-1853984,00.html http://www.eco-logica.co.uk/DirtyfromCradletoGrave.pdf http://www.environmentaldefense.org/TailpipeTally/
http://www.gnn.gov.uk/environment/fullDetail.asp?ReleaseID=177217&NewsAreaID=2&NavigatedFromDepartment=False http://www.guardian.co.uk/cars/story/0,,1647254,00.html http://www.hm-treasury.gov.uk/media/20F/1D/bud06_ch7_161.pdf http://images.businessweek.com/ss/06/07/top_brands/index_01.htm?campaign_id=di4 http://www.itvsales.com/itv/export/download/pdf/1326v04_ITV_AdvertGuideFINI.pdf
http://www.kgpauto.com/Initiatives/Diesel.htm http://mediatel.co.uk
http://www.mises.org/story/2124 Where Would General Motors Be Without the United http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/4249962.stm
http://www.petrolprices.com
http://www.soultek.com/clean_energy/hybrid_cars/consumer_concerns_of_hybrid_cars.htm http://www.superbrands.com/uk/
http://www.topgear.com Top Gear Survey 2005
http://www.toyota.co.jp/en/vision/philosophy/ Automobile Workers Union? by George Reisman http://usa.polk.com/News/LatestNews/2006_0131_pcas_3rdstudy.htm http://www.usnews.com/usnews/biztech/articles/060425/25ethanol_faq.htm?s_cid=rss:site1
http://www.vcacarfueldata.org.uk/information/cars-and-fuel-options.asp http://www.warc.com
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Annual Reports/ Industry Research
Beauchamp, Kirchhof, Weinand, (2005), Toyota, Internatinal Business Statergy Coursework, Westminster Business School Beauchamp, Di Lorenzo, Limberopoulou, Papadopoulos, Papas, (2006) Club Mediteranee, ESMAR: The Positioning of Green Technology Direct Marketing Management coursework, Westminster Business School Ford Annual Report 2005 GM Annual Report 2005 Google Finance Mintel, Car Financing – UK- September 2005 Mintel, Car Retailing – UK – April 2004 Mintel, Fleet Services (Industrial Report) - UK - May 2006 The Direct Mail Information Service (DMIS) - Response Rates Survey 2006 Toyota Annual Report 2004 (year ended March 31st 2005) Transport Statistics Bulletin, vehicle licensing statistics 2005 WPP Annual Report 2005
Trade/Press Magazines
AID Newsletter, Schmidt’s auto publications. Issues from 0601 through to 0611 inclusive
Consumers Association (2000) ‘The forecourt revolution: the future of the car industry’
Economist, September 4th,, 2004, Perpetual Motion
Financial Times, 2006, Motor Industry Report
99
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Honda Annual Report 2005
GM Annual Report 2005
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Electronic sources
http://www.businessweek.com http://www.carpages.co.uk http://www.fleet-central.com http://www.fleetnewsnet.co.uk http://www.flickr.com http://www.getty.com http://news.agendainc.com http://www.omninerd.com http://www.toyota.co.uk http://www.viacom-outdoor.co.uk
