How Green Marketing Helps Toyota to Promote Brand Loyalty - Literature review Example

To Investigate How Green Marketing Helps Toyota To Promote Brand Loyalty: In Case Of Young Adults. Name: Course: Date: To Investigate How Green Marketing Helps Toyota To Promote Brand Loyalty: In Case Of Young Adults. Literature review Introduction When customers go shopping for any product they do so without enough knowledge on the product. Their desire is always to buy the best product or service that a given market offers. In such circumstances, customers always go for products that have built a brand reputation. Such products may at times require a higher cost but with limited research efforts. This is enough evidence to assert that brand reputation does not only affect a customer’s perception of a product, it also benefits a company by lowering its purchase risk. Brand management has become an increasingly essential attribute of products and it has brought a rapid change in the global market. In addition, it has elevated the levels of competition as different companies use different strategies to market their brand to their target customers. Effective management of any brand, as in the case of Toyota or any other product, is essential as far as the broadening of the said brand market share is concerned. This is the belief that Aaker (1991, p.234) hold when he asserts that the establishment of a brand and effective management should always be seen as a source of competition. This is because in the perspective of customers, a brand that has established proper reputation in an industry provides a perfect guarantee that the product is the best. Once such a guarantee is established then the customers will develop a positive tendency towards the purchasing of the brand. The success of any business largely depends on its ability to attract and retain customers towards its brand. This is particularly considered as critical for the survival of any company. Japan’s motor vehicle manufacturing company Toyota is one of the highest ranked companies due to the fact that it operates more than 70 manufacturing companies globally. The company also markets its products in more than 165 companies. It is celebrated for its brands such Avenis, Lexus, Prius among other brands. The company is however facing a challenge of brand loyalty among its customers due to the mass recall of vehicles. Such recall may have devastating effects on its brand. Serafine (1992, p. 52) asserts that every percentage point of loyalty that a company acquires is worth millions of dollars and a loss of the same value is replicated when a company loses any percentage of its brand loyalty. This explains why companies choose to spend a lot of financial resources in the promotion of their products. There is however a possibility that Toyota can still salvage its already damaged reputation due to the fact that it has been trusted by its customers to be a producer of efficient and effective automobiles. Despite this possibility there is a high likelihood that it will have to take some time before Toyota can regain its relatively lost glory. Green marketing and Brand image Baker (2012, p. 813) in The Marketing Book argues that consumers of any product that is well known and is considered of high reputation. This means that a company with a greater brand reputation will attract more customers. Toyota through its numerous products is considered to have a positive brand image which provides a minimal effect in lowering customers perceptions of the risks associated with any of its product in addition, its raises the expectation that they will provide a relatively positive feedback on the products. Customers according to Baker (2012, p. 814) believe that they can make satisfactory purchases by choosing on well known brands. How valued is a give brand? How well does the brand represent its product? Form a funder mental part in the way a customer decides concerning a given brand. Customers always desire a brand that brings with it pleasant memories. Baker documents that the decision by Toyota to develop a green marketing strategy may play an essential role in boosting the brand image of the company. This phenomenon is only realizable when Toyota uses appropriate advertising and promotional techniques as such memories are not embedded in the technology of the features of an automobile that the company produces. Customers always want to know how environmentally friendly a product is by having the knowledge that they can play an essential role in protecting the environment. Baker’s ideas are supported by Wimmer (2011) who holds the belief that the introduction of hybrid cars by Toyota in the market as a marketing strategy targeting young adults can go a long way in promoting the companies brand image. This is especially possible in markets such as that in the United Kingdom dominated by other competitors such as Ford and BMW. In addition, such a strategy fits well with the target customers, young adults whose main objective revolves around using machines that are environmentally friendly as far as the emission of greenhouse gases is concerned. The availability of numerous products by Toyota in different markets makes it possible for customers to choose a product that best serves their interests. Grant (2009, p. 179) the introduction of an ecologically friendly product in an field where there are products that cause damages to environment, enable customers to easily recognize the product, evaluate its quality and purpose in relation to other existing products in the market. This ensure that when it comes to pragmatic product differentiation, a positive brand image may make up for the setbacks that Toyota’s products may have faced during the recall and instead increase the possibility that the hybrid Toyota Prius which emphasizes on the reduction of fossil fuel energy and in its place use electricity as a source of power for the machine, will be selected. Dahlstrom (2010, p. 132) contends that the better the brand image, the higher the degree of recognition that customers give to the brands products. Young adults who are the target customers for Toyota’s green marketing strategy are usually limited in to the amount of time that they take to make informed decisions on whether to buy a product especially when they are in a market that has almost similar products. They will use a brand image as an extrinsic reminder to make a decision on what to buy. Kotler (2000, p. 12) argues that a brand encompasses a name, or a design that is used in differentiating one product from another. For instance, Toyota developed a circular logo as its brand image this creates a positive effect when companies that are environmentally friendly are to be considered. Otttoman (2011) supports Kotler by asserting that a brand image basically revolves around a public perception of a given product. Consumers have the ability of developing a set of brand beliefs concerning where a company products on every attribute and this can be essential to Toyota especially when buyers in different markets get to understand the objective of their hybrid automobiles. Pride and Farrel (2004, p. 25) argue that developing a green marketing strategy on products that largely use fossil fuel energy is not easy. It warrants huge initial financial investments. The recognition by Toyota on the need to market its product through such an innovative way is in itself a technique of creating a new dimension of brand image that further helps boost its sales since it will be associated with development of the environment rather than pollution and depletion of fossil fuel resources. Currently it is evident that the effects of climate change are negative in different parts of the world and this has necessitated the need for an alternative solution. Different companies, according to Pride and Farrel (2004, p. 28) have resorted to innovative ways of curbing this global phenomena. Consumers are also inclined towards those products that consider the safety of the environment in the environment. The United Kingdom for instance has factories that consume oil and eject dangerous gases into the atmosphere. The introduction of Toyota brands into such a market will increase the products market share. Such an increase in the market share will be propelled by the fact that going green, as Young (2010, p. 45), assert is the most welcomed change in the current market. In an attempt to promote its brand image, Toyota does not only rely on the production of motor vehicles that are considers as ecologically friendly, instead the company can also be involved in other campaigns that advocate for the protection of the environment. Customers are always attracted toward brands that use part of their profits in environmental conservation initiatives. Milker (2009, p. 221) supports this idea by explaining the initiatives that Toyota has taken to engage itself in environmental conservation practices. These include aspects such as its environmental grant programs in Vietnam. These initiatives contribute to the development of the brand image since they create a brand perception that will inform their purchasing decisions. Such a strategy increases the likelihood that customers will purchase a given product considering the fact that they need to a feeling of being involved in saving the environment. As they purchase Toyota vehicles, they already know that part of the finance they use in purchasing the said product as Griskevicius (2008, p. 132) documents, will be used in boosting initiatives for environmental conservation. Brand loyalty One of the most elaborate definitions of brand loyalty was espoused by jacoby eta l (1978, p. 10). According to Jacoby’s definition, brand loyalty encompasses the bias and behaviour response that is revealed by customers overtime in the process of making purchase decisions with consideration to one or more alternative brands. The market share of Toyota varies in different markets compared to those of its competitors. Flory eta al (2011, p. 1-3) in the article The Toyota Recall crisis: Media Impact on Toyota’s Corporate Brand Reputation, provide an analysis of how the recall crisis had a negative impact on Toyota’s brand loyalty. Flory et al noticed that in 2010, when the recall was at its climax Toyota experienced a major drop in its market share. Various forms of media played an essential role in discrediting Toyota while others took the recall crisis as a challenge that could face any company. The negative coverage of the company provided information unfavourable to the company’s reputation and the loyalty that the company enjoyed across the globe was in jeopardy. It however important to note that the degree of integrity through which Toyota handled the recall cases also acted to boost its image while at the same time altering public opinion towards its already damaged reputation. This mode helped, as Carroll et al (2003, p. 36) assets, to provided a perfect position through which the company could grow to realize its lost glory. It took studies by Toyota and various research bodies to develop a perfect initiative through which the company could build a positive image and regain public trust. Customer loyalty, as Selegna eta al (2008, p. 1-4) documents, is an important phenomena in any organization and this explains why different companies take up different initiatives to ensure that their products and services meet customer needs and in turn ensure their satisfaction. Companies like Toyota are aware of the fact that the interaction between their brands and the services they provide to third customers forms the basis of a customer’s behaviour and attitude towards a given service or product. Customers become loyal to a product when they are emotionally attached. When such a relationship is developed between a brand and the said product then there is a possibility that the said customers will continue purchasing a particular brand even in situations where the brand is experiencing challenges. Keller (2001, p. 234-235) argues that in the process of building a reputable relationship that enhances brand loyalty, companies have failed to in the creation of memorable experiences especially those companies that are known to have a global impact. Keller stresses that for a company to maintain a strong bond with its customers, there is need for an emotional bond. It is such bonds that are not easily severed and can give any organization a competitive advantage. There is a need to create an environment in which a customer comes from a transaction with transcends the provision of products and services. This, as Ponsonby- Mccabe and Boyle (2006, p. 44-46) document, is essential in the acquisition and retention of customers in the competitive market. This involves the building of a brand relationship in which customers actively interact with each other through various platforms. Toyota is an example of a brand with high rate of customer involvement. The recall was an example of the degree of customer involvement in the access of the company’s products and services. Toyota through its agents and its website provided a platform on which customers were able to air their views concerning the challenges they were facing with the company’s products. The company was able to respond by recalling all the other vehicles that had similar challenges. This is what Mascarnhas et al (2006, p. 211-213) considers as an experiential platform on which customers are able to share their unique and similar experiences about the brand. An organization or company that stretches beyond the provision of products and services to its customers increases its likelihood of creating a strong bond with its customers hence an efficient brand loyalty. Keiningham et al (2005, p. 11- 13) notices that one challenge that companies face is that most of the customer loyalty initiatives that companies develop do not increase customer loyalty as intended. Instead such initiatives only increase the cost of running the said business rather than customer loyalty. One of the reasons identified for the existence of such a phenomenon is in the setting of goals for a loyalty program. A goal must be precise and implementable such that a loyalty program is consistent with the set goals. Customer loyalty is a challenging phenomenon that requires an innovative and technically practical objective. It is so complicated that even major companies in the market may fail to actualize it. Mattila (2001, p. 224) identifies service failure and poor service treatment as the main reasons why companies experience failures in brand loyalty. This can however, not be a challenge if companies developed strategies that were focussed on building strong relationship bonds with their customers. A strong emotional involvement increases the chances of a customer forgiving service failure and it can help to protect a business from losing its customers to its competitors. During the recall of Toyota vehicles in 2009 and 2010, the most affected customers were relatively young adults who were purchasing their firs vehicles. This phenomenon affected the company but as Magi (2003, p. 22-25) documents, the creation of f a social bond with customers can play a major role in reducing customers trust while at the same time enhancing brand loyalty. This does not however mean that businesses can assume customer problems, it emphasizes on the need of creating structures that enhance brand loyalty through high level and qualified techniques of service delivery. Such techniques ensure that a customer’s will have little or no repeats of the same problems in the future. Toyota's green marketing strategies and its environmentally friendly vehicle technologies such as it remarkable hybrid technology Johnson (2011, p. 1-3) in the article Toyota Ranked Top Global Green Brand in Interbrand Study reveals the results of Toyota’s green marketing strategy. According to this report, Toyota has become a leader in making environmental matters essential in its management. This report is enough evidence of the level of attention and dominance that the green marketing strategy brings to Toyota. In addition, Johnson argues that this technique has served to replace the negative reputation that the company had experienced in 2009 and 2011 when most of its products around the world were recalled due to issues of malfunction. The green marketing strategy is in itself a competitive advantage as it heightens the level of competition and innovativeness in the motor vehicle industry. The innovative nature of Toyota that led to the production of environmentally friendly motor vehicle and the eventual development of the hybrid technology is, as Park (2012, pp. 1-5) states, based on the realization by companies and governments that they need to develop and diffuse green technology. In addition, global competition among companies has brought with it advancement in the use of automotive technologies and the eventual desire to develop environmentally friendly vehicles. Toyota’s innovation and green market strategy was further informed by an increase in the use of petroleum that has led t the development of tougher environmental regulations. This compelled innovators in Toyota to seek an alternative means of ensuring their stability in the motor vehicle industry by replacing the internal combustion engines of petroleum fuelled vehicles with Prius, the hybrid vehicle. Park (2012, p. 4) recognizes other driving forces towards this marketing strategy such as government subsidy. Different governments around the world, especially those in economically stable countries such as the US, UK and Korea among other countries provide monetary and other forms of support to those companies that produce environmentally friendly vehicles. This was an opportunity for Toyota to produce its hybrid vehicles at a relatively low cost and boost its market sales. Rahman et al (2013) in the article Analysis of Toyota’s Marketing strategy in the UK Market explains the way Toyota is using its mix marketing technique to ensure it obtains a substantial market share, a powerful brand image and prosper in its innovative technology. The realization that gas guzzlers have no place in the future of UK’s motor vehicle industry led to the introduction of a hybrid engine which works on the power of petrol engine and an electric motor. This technology in the Prius has not only acted as a competitive advantage for Toyota, it has also served to as an innovation that increased the sales of Toyota products. Prius has become the best selling hybrid motor vehicle in the UK since it was launched in the late 1990s. The green marketing strategy is not only a contributor in the selling of cars it also serves to provide residents of the UK with the perception that Toyota is everyone’s car as a result of the varieties that exist. Perreault et al (2000, p. 24-25) in the book Application in Basic Market examine the profitability of the green marketing strategy by Toyota in its endeavours to promote environmental conservation and increase sales of their hybrid vehicles. Perreault et al realized that through the market survey, Toyota had realized that some of the major challenges that first time drivers face is the need for a vehicle that consumes loss amount of fuel. Inasmuch as there were varieties of vehicles that are produced by Toyota, young adults due to their trendy nature also needed a vehicle that was fairly fashionable. Toyota does not regard first time drivers as economically unstable rather it arrived at designing hybrid vehicles as a way of attracting more young adults and first time drivers to a trendy, economically manageable and ecologically friendly car. These target customers needed to feel more involved in the operations of environmental conservation by being the operators of machinery that produce less pollutants. In the development of a green marketing strategy and the eventual sales of its hybrid products, Crowford and Benedetto (2000, p. 23-24) argued that Toyota had to consider three essential factors of the product’s attributes. These included the features of the product, the functions that the product can perform and the benefits of the product. From a theoretical perspective, the features of hybrid vehicles permitted their functions which in turn lead to the realization of their benefits. The most essential part of the hybrid vehicle is its engine system since the rest of the features are similar to those of vehicles that are powered via petroleum. A hybrid vehicle’s engine enables it to be powered with both petroleum and electricity. The function arises at this point since one is able to realize that it can operate in situations where there is no petrol. Alternatively the vehicle is also able to function in a situation where there is limited or no electricity. The benefits of thisvehicle are both in its function and the eventual effect on the environment. Little use of petrol means that there will be little emission of carbon into atmosphere hence less negative impact on the environment. Rodriguez and Page (2004, p. 74) observed that the green marketing strategy was targeting those who required products that have been proven and tested. Toyota had to ensure that its Hybrid cars were reliable and affordable. In addition, this marketing strategy targeted quick adopters of technology. This explains why it was wise for the company to target young adults as they are up to date with the current technology. The promotional campaigns of this marketing strategy were aimed at assuring the public that Toyota was dedicated to the production of environmentally friendly. Toyota employed the use of focus groups to help in determining the design of the vehicle, and to evaluate different aspects that were appreciated and disliked by the customers. According to Kotler (2007, pp 214- 216), the price of any new product in the market is an essential determinant of the possibility that customers will purchase it. The introduction of environmentally responsible hybrid vehicle was an essential part of the green marketing strategy. Kotler observed that Toyota set the price of Prius, the hybrid vehicle in the range of all Toyota vehicles. This strategy made the product purchasable. It was also guarding the product against competition. With a result of more than 100% rise in the sales of Toyota, it was proven that pricing strategy which was informed by the green marketing strategy was the right selection to ensure a maximization of profits and a competitive advantage. Conclusion The development of green marketing strategy by Toyota was an attempt to redefine its area of speciality considering that there has been an increase in demand for environmentally friendly motor vehicles. The development of hybrid car, Prius, was aimed at building a brand image for Toyota considering the fact that it has been facing challenges such as the recall of 2009 and 2010.The development of more reliable and relatively cheaper vehicles, priced within the range of other Toyota vehicles necessitated the production of Prius. Toyota was basically targeting young adults with its environmentally friendly vehicle. 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