Toyota's strategy and initiatives in Europe: the launch of the AYGO

Ewen T.

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Toyota's strategy and initiatives in Europe: the launch of the AYGO

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Résumé du document

Toyota Motor Corporation is one of the biggest car manufacturers in the world. From 2000 to 2005, the sales units have increased from 2.5 million to 7.97 million. With 35 percent of the total market capitalization in the automobile industry, the Japanese firm is becoming more than a serious competitor for General Motor which is the world's largest car manufacturer. In spite of this excellent situation, Toyota is still developing its firm around the world by setting ambitious goal such as "to reach 15 percent global share in 2010". Establishing a market in Europe is one of Toyota's strategies to meet this goal. The brand has launched the first European car, the Toyota "Yaris" which was such a success that the company decided to repeat the experience and ventured into the minicar automobile segment. This segment exists for a long time in Europe. Nevertheless it became popular only in the recent years. Several factors such as economic uncertainty, high unemployment and increasingly high fuel prices have boosted this segment in Europe. Today the big automobile brands are fighting to gain market shares and increase their sales in this specific segment. This document presents a case study about Toyota which answers several questions on the company's strategy. The document is extensive and a lot of Toyota's strategic aspects are being studied.

Sommaire

What is competition like in the minicar segment of the European automobile industry? What do we learn about the nature and strength of the competitive pressures Toyota Motor Europe faces from doing a five-forces analysis?
Is competition in the minicar segment of the European automobile industry best described as global or multi-country? Why? Which type of international strategy is TME using in its international operations?
What do you see as the key success factors for firms in the European minicar segment of the automobile industry?
What forces are operating that have the power to alter the nature and structure of competition in the minicar segment of the European automobile industry?
Based on the information in case Exhibits 1, 3 and 4, how well are the Toyota in general and, more specifically, the Aygo positioned to compete against rivals in the minicar segment? Does the Aygo compare favourably to other minicars and to similar cars made by Toyota's partners (i.e, the Peugeot 107 and the Citroën C1)?
What does a SWOT analysis reveal about TME's situation? Just how attractive is the company's situation and position in European minicars?
Based on your analysis of the industry and TME's situation, what challenges will TME face in attempting to reach its goal of selling 100000 Aygos annually? Do you think the company's marketing strategy will be effective in enabling the company to meet this sale goal? Why or Why not?
What actions would you recommend to TME's top management team to improve the company's competitive position and make the Aygo a resounding success?

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Extraits

[...] Thus, to envisage future with more serenity, companies must identify those driving forces to give them, on time, a strategic response. Then, the question is which driving forces have the power to alter the competition structure in the minicar segment of the European automobile industry? We can identify several driving forces in this European minicar segment: - Emerging new internet capabilities and applications: minicar manufacturer are increasingly using internet and online technology for several actions. This technology is an opportunity to better and to make easier the collaboration with suppliers. [...]

[...] Then, buyers in the minicar segment are very numerous and they have specific needs. So, if a seller is not satisfying buyer expectations the buyer won't hesitate to switch brand or seller and the number of alternative products available to the buyer is high. Moreover, even if the number of buyers is high, it is not easy for sellers to find alternative buyers when a customer is lost to a competitor because they have specific needs. Then, the prospect of losing a customer is going to make a seller more willing to grant concessions of one kind or another. [...]

[...] So Toyota has successfully met the European customers demand. The only dark point is that Toyota made it the top 10 best selling list only for Italy. The Aygo seems to be well positioned to compete against rivals in the minicar segment - First, the perception of Toyota Brand in Europe is very good in term of quality We can see that Toyota brand is better perceived in term of quality than its competitors in the minicar segment. KIA, Nissan, Hyundai, Fiat, Ford don't reach 30%. [...]

[...] Thus, Toyota gave local managers the latitude to adapt the global approach to local. For example, Markus Schrik, managing director of Toyota in Germany and Michael Potthast, Toyota's product manager for the Aygo in Germany, have developed a particular advertising to fit local market circumstances and to target young people. The challenge was to make the car attractive to young, first time buyers but it was obvious that “traditional marketing” could not be used. Then, local managers decided to create direct contact with the potential customers at the place they frequented by developing web site advertising, concert and discotheque sponsor ship, mobile marketing and launching actions in universities. [...]

[...] The Toyota products are positioned in the low to middle price spectrum. Toyota builds his success on high production volume that provided low unit product cost. Then, in this fierce competitive segment, it is essential to produce for low cost in order to have better margins and to develop competitive capabilities to better compete. Nevertheless, in the minicar industry, the price and quality criterion to choose between two products is very important for customers. Those consumers want low cost cars because of a context of economic uncertainty, high unemployment, and an increase of fuel prices. [...]

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