VIDEO CASE 1.2 Toyota's Hybrid Is Hip with Customers A Ithough younger auto buyers in Japan and the U.S. sometimes criticize Toyota styling as too "vanilla," the company's marketplace success indicates that its cars and trucks are on target with millions of purchasers. Toyota's well-known reputation for producing and marketing cars and trucks that people love has allowed it to leap over Ford into second place in global market share and even challenge General Motors for global dominance. Its vehicles are reliable, great on gas mileage, priced reasonable, and easy to drive. Toyota buyers are often loyal customers for all these reasons. So, when Toyota does something new, the auto world-and consumers-pay attention. It's true that hybrid vehicles-those that combine gasoline with electric power-have been around for a while. But not until the arrival of the Toyota Prius has there been a model that mainstream consumers would actually purchase and drive regularly. That success is due to Toyota's reputation for developing advanced technology that people can use and because of some skilled marketing. Maybe you've seen the Toyota Prius around town. It has a distinctive body designed to accentuate the new generation of hybrid motor technology. Instead of simply putting a new engine in a Camry or Corolla body, Toyota's engineers designed a whole new look that people would notice and recognize immediately as a Prius. Built sleek and low to the ground like a sports car, the Prius has a spacious interior, delivers plenty of power, and lists for around $26,000. It also has features found on many conventional vehicles, such as keyless entry and startup. Toyota claims that the car can get up to 55 miles per gallon both on the highway and around town. An environ-mentally friendly vehicle appeals to conservation-minded consumers who are concerned about the consumption of fossil fuels and the preservation of the natural environment. But the technology of the Prius, which can operate either on gas or on electricity-or both at the same time-also appeals to mainstream consumers who want to preserve the environment, drive a convenient car, and cut their staggering gasoline expenditures. Toyota's marketers have their bases covered because the Prius appeals to both types of consumers. The Prius has been an almost instant hit. When it made an appearance at the Academy Awards, celebrities immediately dubbed it the new trend. Because of this sudden and unexpected increase in demand, customers-including those Hollywood stars-had to wait up to six months after placing an order for the new car. Motor Trend awarded the Prius its coveted Car of the Year distinction over such entries as the Chrysler Crossfire, Cadillac XLR, and two series of new BMW models. Acknowledging that the selection of a hybrid vehicle was a first for Motor Trend, editor in chief Kevin Smith explained, "The Prius is a capable, comfortable, fun-to-drive car that just happens to get spectacular fuel economy. It also provides a promising look at a future where extreme fuel efficiency, ultra-low emissions, and exceptional per-formance will happily coexist. That makes it meaningful to a wide range of buyers." This type of success could not take place without building relationships throughout the marketing environ-ment- among workers and the communities in which they live, with suppliers and dealers, industry experts, environ-mental groups, and the men and women who buy the vehicles. When demand for the Prius suddenly increased dealers didn't have enough cars to satisfy their customers. One Toyota Motor Sales USA executive, Jim Press, pushed Toyota executives in Japan to increase production so that the company would not lose customers and damage relationships with its dealers. The company agreed and was able to boost production by 50 percent over a single 12-month period. Toyota maintains a strong commitment to safe and environmentally friendly manufacturing methods as well as producing fuel-efficient vehicles. The firm welcomes input from workers and has developed strong relationships with environmental groups. "Toyota has placed great importance on protecting the environment," states its Web site. Nearly 99 percent of all scrap metal generated by Toyota plants is recycled, and the vehicles themselves are 85 percent recyclable. In addition, the firm seeks ways reduce waste, such as applying paint with a roller rather than a sprayer, a process that reduces paint consumption by 40 percent. Consumers and environ-mental groups alike gravitate toward Toyota because of these practices. Toyota-and the Prius-have also won awards from groups like the National Wildlife Federation, the Sierra Club, and even the EPA. This commitment to the environment extends to the firm's relationship with its suppliers. "Toyota has a unique relationship with its Toyota Manufacturing North America Inc. "We are known for expecting them to share our high-quality standards. Now we are asking them to join us in becoming environmental leaders." The Green Supplier guidelines developed by Toyota require suppliers to comply with chemical ban list and ensure that hazardous materials are transported safely according to Toyota's standards. Instead of simply reacting to changes in the marketing environment, Toyota has taken a proactive role in improving its manufacturing processes, developing better cars, and building strong relationships. The Prius isn't a novelty-it's just the beginning of a whole new breed of cars. KALondrigan\BUSN255\BUSN 255 Syllabus Fall 2015.doc Questions for Critical Thinking 1. 2. 3. 4. 5. How does Toyota create utility for consumers? In what ways does Toyota practice relationship marketing? How would you describe the role of critical and creative thinking in developing Prius? As a consumer, would you purchase a Prius: why or why not? List the advantages and disadvantages of this car.