Comparing the Marketing Approach of Two Companies - Toyota Camry and Honda Accord - Case Study Example

Comparing the Marketing Approach of Two Companies Toyota Camry and Honda accord Table of Contents Executive summary 3 Introduction 4 Industrial background 4 Company background 5 Toyota Company 5 Honda Company 7 Strategic marketing and planning 8 Macro environmental forces 9 Micro environmental forces 11 SWOT Analysis 12 Toyota Company 12 Strengths 12 Weaknesses 12 Opportunity 13 Threats 13 Honda Company 13 Strengths 13 Weaknesses 14 Opportunities 14 Threats 14 Target market 15 Targeting strategy 16 Positioning strategy 16 Recommendations 17 Conclusion 17 References 18 Ancas, M. (2004). Honda & Acura performance handbook. New York: Motorbooks International. 18 Executive summary The automobile industry is growing at a drastic rate due to the high demand for motor vehicles and also the fact that cars have become more of a necessity than luxuries. The increase in digital system has led development of sophisticated cars especially in an attempt to deal with vehicles safety. The industry has incorporated E-commerce to make purchasing easy and also manage to get feedback from customers effectively. Toyota has been operational for a long period. Its most popular cars are the Corolla and Camry models. Toyota has currently gone beyond cars production and is expanding into marine, housing and financials. It has been dominating in the world with its assembling and manufacturing operations extending to majority of the countries in the globe. Camry is a Toyota model that has earned the company a wide market base in both developed and developing countries especially the US. This is due to its comfortable interior design and fuel consumption efficiency. Honda Company is famous for production of quality cars and motorcycles. They are the main distributors of sporty cars as well as those that are utilized by majority of safari rally competitors. Honda accord has earned the company wide market in the developed countries since it majors in sporty cars thus attracting both the young and middle aged professionals. This study will show how the two companies have applied proper marketing and planning to ensure that they effectively deal with the various macro and micro environmental factors. It also shows how the two companies deal with the problem of competition through proper utilization of their strengths and opportunities to overcome the weaknesses and threats associated with the Toyota Camry and Honda accord cars (Kotler & Armstrong, 2005). Introduction This paper will tackle Toyota and Honda Company and give specifications concerning Toyota Camry and Honda accord which are great competitors in the market. Toyota is amongst the world’s most successful and best known companies in producing cars and trucks in 27 countries and selling them in more than 170 countries globally. The company gains customer loyalty through their production of goods that can meet customer needs at lower cost. Camry and Accord are great competitors especially in the United States due to their close price margins. Camry costs between $24,000 and $34,000 while accord ranges between $21,000 and $ 38,000. Honda Company is coming up at a high rate especially because of the magnanimous utilization of technology by the company thus enabling her to produce high quality cars with long-lasting engines. This report will give the industrial background of companies and the automobile industry, micro and macro environmental forces, SWOT analysis, market segmentation and other strategies utilized by the two companies in marketing the Camry and accord. Industrial background Production of new motor vehicles reached its peak in 2007 when 73.3 million vehicles were produced. The production of motor vehicles keeps on fluctuating year after year depending on the nature of the market, the availability of resources and the legislations existing in different countries. Each year, millions of cars are put on road but people are less concerned with the company that produced most cars. Statistics indicate that Toyota was the highest motor vehicles producer producing 9,237,780 vehicles, seconded by general motors’ producing 7,672,388 vehicles. These were followed by Volkswagen producing 6, 517, 288, and then ford, Honda producing 3,912,700 units, then Nissan, PSA Peugeot Citroen, Hyundai-Kia, Suzuki and finally Fiat who produced 2,524,000 (James,2007). Automotive industry is also central to the prosperity of Europe Union (EU) countries. EU is ranked as the largest motor vehicle producer producing approximately 18 million vehicles per year. It is the main driver of invention, innovation and knowledge in Europe since it consumes more than €20 billion of the amount reserved for research and development. United States is another large cars producer. Toyota rising at a first rate and has a 15.4% market share in US. This shows that it is the third from General motor which has 24.3% and ford which has 16.4%. Currently, the automobiles are like computers on wheels due to the increased quantity of the digital systems in the passenger cabin and under the hood. The vehicle manufacturers are coming up with sophisticated electronic systems at a very high rate in an attempt to address vehicles safety, infotainment and telematics. Cars are becoming computerized hence more complicated. This has made it difficult for an individual to repair a car if he does not have specialized skills and tools. E-commerce has also become a common sales strategy in the automobile industry due to the increased purchasing power globally making it easy to purchase vehicles from overseas. Company background Toyota Company Toyota began as an ambitious undertaking of the famous Toyoda Automatic Loom Works owned by Kiichiro Toyoda in 1933. The glorious history of the Toyota Company emerged in 1937 when it started operating independently. The company’s first models were the A1 passenger car and the G1 truck which were closely followed by the introduction of the AA passenger car. The greatest venture for the company which still contributes to the success of the company up to date was the ‘production of the commercial cars which took place after the World War II. In 1982, Toyota Motor Sales and Toyota Motor Company merged to form the current Toyota motor corporation. Toyota is famous in production of Prius, Highlander, Avalon, Tacoma and Tundra models. Toyota has distributed its assembling and manufacturing plants in both the developed and developing countries such as US, Japan, UK, EU, Australia, South East Asia, Pakistan, Vietnam, and Thailand (Morgan & Liker, 2006). Their largest market share is in the developed countries since they can benefit from the high technological, educational and professional levels of the employees. The extensive use of the Toyota came with the introduction of the hybrid cars such as the Prius which can use other sources of energy other gas and oil. They are also known for minimal emission of dangerous gases thus meeting the modern demands of environmental safety. The FY2009 showed that Toyota is the largest world’s automaker producing over 7.567 million vehicles. Toyota Camry is mid-size automobile which was manufactured by the Toyota from 1982. It is usually assembled in USA, Kenturky, Georgetown, Victoria, Australia, Altona, china, Guangzhou and Japan. Camry has been the latest selling car in the US, Australia, Canada and Asian markets with the US being the highest consumer since 1997. It mainly competes with Honda accord, Saturn Aura, Chevy Malibu, Nissan Altima, Ford Fusion and Mazda 6. 2010 Toyota Camry has array of enhancements both outside and inside including safety, convenience, audio, performance and exterior styling thus making it a strong power train for 2010. The car is likely to attract a large number of customers since it is environmental friendly since it releases less smog forming emissions and also due its comfort ability and convenience. Honda Company Honda Company was a dream comes true for Soichiro Honda its founder. Honda is rated as the world’s largest motorcycle manufacturer, the fifth world’s largest automaker and has obtained its fame as the producer of quality four- wheeler like Honda civic, Honda city, Honda CRV and Honda accord. The firm functions in four main segments which are automobiles, motorcycles, power products and financial services. Honda employs about 180000 employees in its manufacturing firms located in U.K., France, Italy, Spain, Turkey, USA, Canada, Thailand, Philippines, Japan and China among many others (James, 2007). The company consolidate a revenue of 10,011.2 billion in FY2009 thus was rated among top 100 world’s largest companies by revenue. Honda accord is a mid-size automobile which is manufactured by the Honda Company since 1976. The model emerged as a result of the company’s high desire to harmonize the automobile, people and the society. This was due to the demand of meeting the vehicle emission standards that were introduced as a solution to the fuel crisis. Honda accord has been among the highest selling Japanese cars in US for the last fifteen years taking a lead in 1991 and 2001. Honda accord is an exceptional brand for the company due to fuel efficiency, its high value and the fact that it is the only vehicle that has won the company an award since it was given a 5-stars rating (Ancas, 2004). Strategic marketing and planning Strategic marketing and planning is a process that helps the business management to plan and execute the conception, promotion, pricing and distribution of goods, services, ideas and people in an attempt to create exchanges that will satisfy its customers and meet organizational goals, missions and visions. Toyota has a strategic hierarchy in their planning. It penetrates into markets with large competitors like North America through market niching and focusing (Morgan & Liker, 2006). These markets were formally dominated by GM, Ford and Chrysler. They specialized in a niche that was in high demand for small cars and established a strong customer relation which could not be conquered by the American big three. A niche is then extended into a segment and finally is able to attract customers from the entire country. This strategy is also utilized by Honda since they identify a customer who participates in international games and give him their automobiles as a means of advertising their products. Both Honda and Toyota portrayed their strategic planning skills through their immediate response to the environmental concern. Majority of the developed and highly industrialized countries are focusing on utilization of environmentally friendly motor vehicles to reduce air pollution. There is a high competition between Honda accord and Toyota Camry since both have fewer emissions and consume less energy. According to Ancas (2004), Honda keeps changing with time to ensure that they meet the needs of their targeted customers. In 1960s and 1970s, they increased their sales by targeting the groups that did not use motorcycles such as commuters and women. They developed a variety of small, light weight and economic machines and backed it with advertising campaigns that emphasized on style and convenience. From 1980s they begun targeting the middle-aged by producing larger motorcycles and marketed them by emphasizing on recreation activities for the youths. Honda is able to penetrate to majority of the markets due to the high quality engines that satisfy the needs of majority of their customers (James, 2007). Toyota cars engines are not equally as good as those of Honda but are able to conquer Honda cars due to the fact that their engines and spare parts are compatible with those of majority of the cars and are readily available. The ease in repair and maintenance is their greatest strength. Macro environmental forces Macro environmental factors refer to the pest analysis of a certain company. This analysis includes; political, economical, socio-cultural and technological factors. We first consider the Honda Company, automobile sector in India has widely influence the markets to an extent whereby its government has enhanced foreign local investment policies and economic development boosters therefore much focus towards the automobile market. More flexible policies have been made to ease financial procedure whereby banks have been advised to provide easy auto finance to consumers. For instance, exchange rates in India are offered at ease within finance schemes with a discount of 0% (James, 2007). Based on economical environment, automobile industry especially that of the two wheeler automobiles found in India is highly associated with medium level individuals who are considered to buy them. Even in their recession period, they are still blooming therefore developing strong potentials. It is evident that the segment of the middle class is becoming stronger making prominent domestic sales for the two wheeler automobile. On socio/cultural environment, it is widely focused on demographics and cultural events which is an enormous area in the study of social and cultural changes. For instance Honda has been involved with the launch of “pleasure” whose tagline is “why should boys have all the fun”. Considering the Indian culture where women tend to work other than staying at homes, this scenario has changed creating a positive response towards the Honda Company. It is also noticeable that the company has been involved in marketing of various prospective to the younger generations whereby they include style and sporty looks on bikes to attract this generation. On technological environment, Honda has been involved in the new advancement and innovations within upcoming technology. As a way of being distinctive with its competitors, Honda has offered wide product range like that of the Honda accord so as to target different segments. In this competitive world a company requires advanced and new technology for ease in the implementation of its products. Considering Toyota macro environmental factor, it is very evident that stability in politics have largely improved international relation (Morgan & Liker, 2006). The strong economic growth has benefited Toyota dynamic markets. With the various dynamic market changes, it is obvious that the demand of various industrial especially that of automobile particulars has greatly improved. Based on the economical environment, it is notable that middle class group is of great importance in the economical growth within Pakistan. There has been huge investment within the Toyota Company from this group resulting to increased rate of return in the region. On socio/cultural environment, unlike Honda Company, it is evident that the small community is not involved with the availability of spare parts of the Toyota automobile (Liker, & Hoseus, 2007). The local auto has continued to receive greater threats from various schemes and the sale of counterfeit spare parts. Just like the Honda is advance in technology, Toyota has also considered improving its technology so as to be ahead of its competitors. It has gone ahead in to launch new products so as to have various targets on different segments. With this era of globalization it is very important that this company advances with the change of technology so as to beat its competitors. Micro environmental forces These are the forces that tend to have a direct impact towards company strategies. They are mostly internal factors. Honda has a list of competitors ranging from local and foreign producers. They include; Toyota, Mitsubishi, Mercedes, BMW and Suzuki (James, 2007). Due to an awesome amount of profit within the car industry, new models of the Honda accord have entered the market to compete with other companies new launches. Honda is utilizing the advanced technologies within this era of globalization for quality cars production. Honda has come up with ways of managing sales. For instance, it has been involved in the constant control of the distributors’ weekly sales estimates, controlling and settling its distributor purchaser claims per policy implemented, analyzing and controlling of the profits made by each distribution channel and it has involved itself in interval collection of outstanding fee per wholesaler policy. Like the Honda Company, Toyota main competitors are the Suzuki, Honda, Daihatsu and Dewan Farooque motors. Suzuki being a household name in the sale of small commercial vehicles remains as the key competitor. Honda is the market leader when it comes to autos of lower segment and those of 1000cc as opposed to Suzuki. Honda has and is continuing to enjoy a key position in the 1300cc segment and above (Ancas, 2004). Its launch of a new model of the accord has continued to be admired by customers. Considering Dewan motors, it’s a competitor in the sense that it has begun its operation with a wider range of product in the local automobile market. Finally, Daihatsu with its Cuore 850cc has been seen to increase competition of the Toyota Camry within the market of small car segments. SWOT Analysis Toyota Company Strengths A SWOT analysis is the study of the strengths, weaknesses, opportunities and threats of an organization, business enterprise, an individual or a commodity. Toyota have its strengths which are the possession of a large market share since its distributed to a variety of the countries, majority of its models have low fuel consumption, their prices are not exaggerated and they also give loans and leases to their clients making their cars affordable, there is ease in obtaining the spare parts making repair and maintenance affordable and finally Toyota has well developed distribution channels for their products hence able to reach their target markets in good time. Weaknesses Toyota has a variety of weaknesses. The greatest is the rampant production of counterfeit parts. The drivers also complain that the steering of their cars including the Camry is too light hence placing difficulty in feeling the road. Liker & Hoseus (2007) asserts that despite their utilization of current technology, there are complains of frequent cars breakdowns even after being updated to ABS. Opportunity Toyota has the opportunity of obtaining an extra market if they properly advertise the modern designed 2010 Toyota Camry which ensures maximum customer comfort and convenience. They also have the chance of utilizing the technology in developed countries to produce sporty cars that will effectively compete with Honda models. Threats Toyota is faced with the threat of tough competition from other car manufacturers especially from Korea and Japan. There is also a drastic increase in oil prices hence the decrease in Toyota Camry vehicles. The company is also being faced by the downward trend for the Toyota Camry due to competition from other companies and also overdependence on US markets. They are also experiencing the threat of cooperation of General Motors BMW and DaimlerChrysler in production of joint development of hybrid cars (James, 2007). Honda Company Strengths Honda Company enjoys a variety of strengths. The company is famous in production of quality cars due to their high quality engines. Their cars are designed to provide maximum comfort to their clients they also have good technological base thus producing quality and long-lasting cars. Weaknesses The company has low advertisement strategies for the Honda accord thus having a low customer base. The car also has a poor quality body structure which is not appealing to the customers. Their spare parts are not compatible with other models thus depending on the Honda car users in spare parts purchasing. Opportunities The introduction of accord has increased the product line for the Toyota accord since it has fewer effects on the environment pollution. Majority of individuals have discovered that cheap is expensive hence go for quality engines and not the appearance. Honda can utilize this to expand to international markets. Threats Honda is faced with threat of unstable policies due to political instability in its countries of operation. They also face the threat of limited power of purchase due to the high price of their models. There is also decreased share for the Honda accord hence not able to get wide customer base. Market segmentation Market segmentation is the process of separating a total market into market groups consisting of individuals who have similar needs towards certain needs therefore creating a cluster of needs. Based on Toyota, the company has come up with Toyota prius to those customers are environment conscience. Toyota has gone ahead to design cars with a foldable rare seat making the car with an extra area of luggage. By so doing it is very evident that it targeted customers who usually carry a lot of luggage and also ensuring that the car is still comfortable. For parents with small babies Toyota has come up with child safety locks attached to the car for child safety purpose. As compared to Toyota, the Honda Company has focused on ensuring that its market segmentation is good so as to compete with its competitors. For instance, it’s pilots formula buyers go for it refinement and good performance. Target market Target market refers to specific customers that a company intends to capture by providing them with goods and services that effectively satisfy their needs. The target market for Honda accord is young professionals. The target for the Toyota Camry is middle-aged professionals. Characteristics of the target market Honda accord Toyota Camry The young professionals Middle aged -They prefer sporty cars -They are rowdy hence prefer quality engines for their cars -Like feeling the road when driving -Prestige is more important -Are more cautious on the comfortability of the car -Most have families and are cautious on the interior space -Have responsibilities hence are price cautious -Consider the cost to be incurred in car maintenance and repair before purchasing Targeting strategy Targeting strategy is defined as the selection of customers to whom a particular business wants to sell its products and services to (Bennett & Blythe 2008). Honda accord mostly targets the purchasers of luxurious cars such as stars and the developed countries where the youths drive right from their early life stages. They utilize differentiated target strategies by designing different promotional messages fit for each age group. Toyota utilizes concentrated targeting strategies by designing promotional messages that portray the benefit of Camry to the middle-aged (Morgan, & Liker, 2006). They are planning to use the message that the sportier Camry will be an excellent design to be used by the middle-aged adults since it will make them feel younger. Positioning strategy Positioning is described as how businesses and companies differentiate their products and services from their competitors and later on they decide on which market will suit their products (Liker & Hoseus, 2007). Honda Company with the help of its different departments in cars such as Honda accord is placing itself all across the globe. It is evident that Honda Company through its market department has assisted in the distribution and selling channels. Considering Toyota, it has decided to cut its production across the world to adjust its volumes to fit demand. This was as a result of its annual losses caused by a shrink in its market and the constant shift in industrial dynamics. The company has also ensured that it remains the best in terms of quality even in its recession period. In its effort to capture the market share of the Toyota Camry, the company has cut down its prices so as to gather a position to compete with the Honda Company. Recommendations Toyota should focus in production of sporty cars so that they can afford to fight their great competitors’ (General motors and ford) by winning the young adult customers. Both companies should become more environmental cautious and focus on invention of cars producing less emissions. Honda should focus on external appearance of their cars so as to be appealing to the customers at first sight and to march with the interior quality The government should assist the automobile industry to fight counterfeiting of their parts to increase customers’ confidence. Flexible policies should be made for easier financial procedure whereby banks should be advised to provide easy auto finance to consumers. The automobile industry should take maximum utilization of the E-commerce by utilizing the internet to make international purchasing easy. Honda should improve their marketing strategies so as to win a larger market base. Conclusion Honda accord and Toyota Camry are two car models that right from their invention have competed in the market due to their similarities. What have determined the rate at which their products penetrate the market is their strategic planning and marketing skills. Toyota Camry has not been able to capture the young customers and hence need to work on making the car sporty. Honda accord has to work on their external structure to make the car appealing to the customers at first sight. References Abrams, R. (2003). The successful business plan: secrets & strategies. Palo Alto, Calif.: The Planning Shop Ancas, M. (2004). 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