Creating a Global Brand: Toyota Motor Corp.

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Introduction

Toyota is one of the leading automobile manufacturers in the world. The multinational employed over 315,000 workers in 2012 to make it the largest automobile manufacturer. Having being founded in August 28 1937, Toyota Motor Corporation has grown to include a group of companies including Daihatsu, Lexus, Hino Motors, Scion brand and Toyota (Toyota 2012).

The founder of the company was Kiichiro Toyoda who ventured out from Toyoda Industries which was owned by his father. The company is based in Toyota which is in Aichi, Japan.

Toyota operates worldwide and its success in the automobile industry is as a result of sound management practices and implementation of strategic marketing policies. This paper seeks to analyze how Toyota has created a global brand and the features of a global brand it has successfully implemented.

Strength of Toyota in home market

For a global brand to be successful, it has to be strong in its home market where it was first introduced. Toyota was founded in Japan and though it is now an international brand, it first had to perform well in Japan. Toyota is so strong in its home market that most people in Japan and Chinese speaking countries identify with this brand.

This has made it extremely difficult for other automobile countries to make an impact in this region of the world. Dominance of the home market prevents new entry of competitors. This has been beneficial to Toyota as it has been able to minimize competition in Japan.

Dominance of the home market is a characteristic of all major global brands. It enables other markets to also appreciate the value of a brand since they are aware of its existing popularity and customer preference in another place.

Other markets would not appreciate Toyota automobiles if the Japanese people were not driving them. It would be suspicious since foreign consumers would not understand the underlying reason why the brand is infamous in its home market.

Toyota’s strength in its home market was revealed by the 2010 Interbrand report. This report revealed that Toyota is ranked top of the list when it comes to the most valued brands in Japan. Toyota beat companies in other industries other than the automobile industry such as Sony, Nintendo and Toshiba.

This was as a result of the company’s potential to influence consumer selection and generate revenue from its branding activities (The Independent 2010).

The strength of Toyota in its home market is seen through comparison of sales volume in Japan and North America. In 2007, 2008 and 2009, Japan sales were: ¥ 8,152,884, ¥ 8,418,620 and ¥ 7,471,916 while in North America they were ¥ 8,771,495, ¥ 9,248,950 and ¥ 6,097,676 respectively (Geographic Breakdown 2009).

Geographical balance in sales

Toyota is well represented globally in terms of brand awareness. There is no place in the world where Toyota brand is not well known. It is an international brand that has presence and recognition in every region in the global automobile market. There are however regions that have adopted Toyota more than other brands. Other countries prefer other brands especially if it is an automobile manufacturing nation such as Germany.

Toyota has addressed its global branding strategy in three faces. It has considered the aspects of recognition, awareness and sales. Being a global manufacturer of automobiles, Toyota has developed its marketing strategies which are aimed at creating sales from all regions of the world.

It considers aspects such as cultural differences so as to make the marketing communication universal. The sales volume between 2007 and 2009 reveal the geographical imbalance of Toyota’s operations. This is reflected in the table below:

Table extracted from Geographic Breakdown (2009). Web.

Toyota’s marketing activities do not only target its home market in Japan. Rather, it develops marketing programs that are applicable in different regions of the world. For instance, the Chinese speaking countries use different writing styles as opposed to English speaking countries. Toyota does not develop its adverts in Chinese language only just because it is based in Japan.

There are adverts meant for the Chinese and others meant for other markets. This approach ensures that awareness is created evenly in the world so that the brand grows everywhere. This reflects in the Toyota’s sales since there are substantial volumes sold in both English and Chinese speaking regions of the world.

However, Toyota is excessively popular in the eastern part of the world as opposed to other regions. Due to this, the sales volume of the company in countries such as China, Hong Kong and Korea are very high as opposed to European sales. This is partly because European countries such as Germany and the UK also produce automobiles of their own.

They therefore dominate the European markets since it is their home market. Toyota needs to overcome this obstacle if it is to rank among the top international brands such as Microsoft. It is important that international brands balance their sales volumes across geographical regions as this acts as a foundation for their stability in the global market.

Addresses similar consumer needs worldwide

One of the ways through which Toyota meets the needs of consumers globally is by creating service centers in almost every country. Service centers are necessary in the automobile industry because vehicles constantly require servicing. Independent mechanics cannot be entrusted to satisfy the needs of all consumers, especially corporate customers.

Toyota is able to get feedback and respond to customer queries through the service centers where people bring their troublesome vehicles. This strategy has so far been successful for instance during the recent recalling of various models by Toyota. The service centers of Toyota reveal its corporate framework in dealing with product issues (Siddiqui 2011).

This was a direct investment by Toyota in its brand and it has enabled the company to gain mileage from its competitors such as Honda and Nissan which are also based in Japan. Toyota would not be successful if it was not effective in addressing consumer needs. Toyota’s effectiveness in meeting consumer needs is what makes an estimated 80% of Toyota vehicles to still be in the road 20 years after they were sold (Siddiqui 2011).

Consistent Positioning

Toyota is very consistent in its positioning strategy. Over the years, the company has adopted different themes to direct its marketing activities. For instance between 1975 and 1979, Toyota’s theme in North America implied that the company was in the business of providing consumers with what they ask for.

In another theme, Toyota implied that that they satisfy customers such that none of them can ask for something in addition to what they offer. In another slogan, Toyota stated that most cars on the roads were Toyotas so that consumers could be motivated to choose this brand over others.

The positioning of Toyota therefore is aimed at creating a picture of automobile dominance in the consumers’ minds. This is seen from the various themes and slogans that Toyota has adopted over the years.

The global vision of Toyota is aimed at making the brand the most preferred in the automobile industry. The vision states that Toyota will revolutionize the motor industry in future because of its innovativeness and goals. The objective of producing safe vehicles is the tool that the company intends on using to make Toyota the best automobile brand in the coming days.

The company’s vision also specifies Toyota’s commitment to environmental concern since vehicles contribute greatly to global warming. Quality is also assured to customers in the global vision as well as a guarantee that the most talented people would be responsible for organizational operations (Toyota 2012).

Following the approach specified in Toyota’s global vision, the company positions itself as the brand that will define future automobile activities. Positioning is important as this affects consumers’ perspectives of brands. The core values of teamwork, innovation and quality assurance assist in the achievement of organizational objectives by directing efforts towards the vision.

Effective positioning also influences consumer behavior as it makes the purchasing decision making process easier. When automobile consumers go to a motor showroom with the intention of purchasing a vehicle, the perception that they have of the different brands affect the products that appeal to them. Some even go specifically to purchase that brand which they already perceive to be superior.

This is the strategy that Toyota uses so as to create the perception that its brands are more superior to other automobiles in the market. This has worked out successfully so far since Toyota’s mission statement, core values and global vision ensure consistent positioning in the global market.

Country of Origin effect

The COO effect refers to the impact that the country where products are manufactured assembled, designed or where the corporate ownership originates from has on a brand (Doole 2008). Some countries are notorious of producing substandard products and counterfeits. China apparently tops this list of exporting goods that are of inferior quality to unsuspecting consumers in other countries.

The COO effect favors Japan since the country has a good reputation of producing quality products since it depends on exports for GDP growth and development. Many global companies in the electronics and automobile industry are known for their production of quality products and brands. This has favored Toyota which is also based in Japan and so there is a positive COO effect in relation to their brands.

However, some of Toyota’s operations are based in China. The business environment in China favors manufacturing operations since the costs of production are lower because of availability of cheap labor. In the automobile industry, some cars are not sold directly from the company as independent importers buy from car dealers and agencies.

In this regard, some of the Toyota vehicles distributed in some areas of the world especially in developing countries originate from China. China is always the easiest source of products since there are lower costs and fewer bureaucracies that importers and exporters experience.

The COO effect comes to play in this case since some consumers have become cautious of vehicles they buy given that China products are known not to be genuine and long lasting. Toyota tries to overcome this hurdle by encouraging corporate clients to purchase only from authorized dealers who can guarantee after sale services in case vehicles develop complications.

The COO effect affected Toyota during the recent recall of faulty vehicles. Toyota decided to recall about 8.5 million vehicles which it had discovered to be faulty (Fangfang 2010). These vehicles had brakes and accelerators which were problematic and capable of causing accidents. After this action, automobile consumers became weary of vehicles that are manufactured in China.

Some even feared for their vehicles even though they were not in the list of the faulty models. This action also reduced the number of potential customers who visited Toyota showrooms. The faulty vehicles comprised of the RAV sport utility model. Chinese automakers are known for their ambitious expansion operations and this only adds fears to consumers of the possibility of future mistakes being made in the automobile industry.

Product category focus

Toyota produces a variety of products. Their product strategy is however different from that of other automobile companies such as General Motors and Ford. Toyota has focused on the automobiles which are its core business. For this reason, the brand Toyota is commonly associated with automobiles and not other product categories.

The company has therefore successfully achieved product category focus since its publics are never confused about what Toyota specifies in producing. Toyota however has a subsidiary, Toyota Financial Services which focuses on financial services, and is part of the Toyota Group of Companies. Unlike Chinese companies, Toyota’s product specialty is not too diversified to enable consumers identify the core business of the company.

Another aspect that distinguishes Toyota’s product strategy from its competitors is its single corporate brand (Ritson 2010). The sales of Toyota revolve around the sub brands related to Toyota. The company also markets brands such as Scion and Lexus but Toyota is the most dominant.

This business approach has led to the company’s prosperity since there has been a united effort from organizational operations, management and culture. The single brand focus has simplified manufacturing activities since the components needed for most products are the same.

Marketing of Toyota automobile models has also been easier and cheaper since the sub-brands are all related to the corporate brand. The single corporate brand strategy makes manufacturing easier as components needed in most models are the same.

Corporate name

Toyota’s marketing activities are simplified because the company’s sub-brands are all related to the corporate name. The company uses the same name for the brands and the corporation. This means that advertising the company directly markets its brands given that they share a name. The name Toyota was initially Toyoda which was the founder’s name.

This was changed in 1936 so that the corporate and brand name could be differentiated from the owners. This was important so that organizational matters could be separated from family issues and problems. Toyota as a brand has since been successful since it is independent from affairs of the owner’s family.

Changing the brand name to Toyota also sounded better than Toyoda in Japanese and its meaning was also appealing as it stands for wealth and fortune.

Toyota’s corporate name was abused before the 1990s. Before this time, the name Toyota was used worldwide for different purposes and this made marketing efforts such as positioning and strategic advertising the company difficult.

This changed in 1989 when Toyota introduced its logo which was meant to differentiate the brand from others. The fact that the company name and its products are all Toyota means that marketing the company as a brand is marketing the product and vice versa.

Status of Toyota as a global brand

Toyota has worked tirelessly so as to achieve the global brand status. These efforts have however not yet been ultimately successful going by the latest results from the Interbrand report. The problem with attaining the global brand status appears to be more than an organizational challenge because no Japanese company was able to appear in the top ten most recognizable brands.

This list was filled with companies from the US which strategize on global growth as opposed to regional growth. Toyota on the other hand has enormous sales volume in some regions while others have minimal.

The 2002 sales report indicated that Toyota was dominant in Japan and the North America but weak in Europe and Asia. This was before the entry of Toyota into the Chinese market but it nonetheless indicated that the company’s sales are concentrated on certain areas only.

Toyota has the potential of becoming one of the leading brands in the world. This is because the production volume of the company symbolizes that of a global leader. In 2009, Toyota surpassed General Motor’s production volume to become the leading manufacture of automobiles. The sale of Toyota vehicles is however concentrated on certain regions only.

This demonstrates that if the company was able to balance its sales geographically, it would create large volumes of sales and achieve high profitability. Geographical balancing of sales is what is standing in the way of Toyota in its quest of achieving its full potential and a global brand status.

It can be concluded that Toyota is more than halfway done with its global branding process. This is because it has successfully accomplished some of the features that characterize fully developed global brands. At the same time, some important features have not been amicably addressed by the company.

Aspects such as strength in home market, addressing similar consumer needs, consistent positioning, product category focus and corporate name have been addressed well by Toyota. Conversely, geographical balancing of sales and the country of origin effect still drag Toyota behind. The COO effect is somewhat related to external factors since other Chinese manufacturers who produce inferior goods tarnish the name of the entire country.

Internationalization Of Chinese Firms

The types of internationalization include born global and incremental internationalization. According to Child and Rodrigues (2005), the difference between the two is that incremental internationalization is the conventional approach whereby the process takes time and is only carried out when a firm is ready to venture abroad. Born global internationalization is whereby companies seek market share in the global market right from their inception (Moen 2002).

The approach sought by Chinese firms has for a long time been incremental internationalization because the Chinese market was large as a result of the high population density. It was only recently when new Chinese firms adopted the born global strategy because of the competitive disadvantages that local companies had.

Globalization is now the leading trend in business and any company that aims at success and profitability will have to embrace it. The Chinese thought that the local markets could sustain profitability for their businesses but entry of foreign investors increased competition to an unbearable level.

When it comes to the network theory of internationalization the current age of companies operate in the network model since joint ventures have become the order of the day (Park and Luo 2001). For instance, instead of Apple setting up a manufacturing company in China, it decided to use a subsidiary instead.

The partnership between Apple and Foxconn showed how Chinese firms were willing to form joint ventures with foreign companies so as to achieve growth and prosperity. Toyota and FAW also joined forces to become the largest joint venture in northeast China (Roberts 2006).

The network model of internationalization is perceived to be a modification of the stage models since it is simply a quickened process of attaining the same objective (Chi-Hsing and Hsin-Chih 2008; Tichy, Tushman and Fombrun 1979).

Under the stage model, internationalization is achieved gradually through a series of steps. This mostly applies to small and medium sized businesses which would lack capital and manpower to run foreign operations.

The need to expand outward from a local market arises when there is either stagnation of sales, opportunities in foreign markets or need for corporate growth (Cateora, Gilly and Graham 2009). Chinese firms experienced the decline of demand in the domestic economy once many people ventured into business activities and then multinationals also entered the market.

Chinese firms became motivated to venture abroad as a result of the entry of multinationals which sought to tap from the new and large Chinese market.

Multinationals such as Nike, Google, Coca Cola and Apple rushed to the Chinese market after the removal of trade barriers that had prevented foreign companies from operating and selling in the country. This move prompted Chinese companies to consider expanding externally so as to remain competitive in the industry.

The conventional international theory held that investing in a foreign country was supposed to come much later after a company begins operating (Oviatt and McDougall 1994). This was the case for companies such as Toyota which operated in its home country for many years before going global. This situation has since changed as the business environment has become more dynamic and competitive.

Currently, most companies go for the born global approach where they strategize on becoming international right from the time they are established. Chinese companies have not been left behind in this quest for global market dominance. Due to this change of business approach, there is hardly any large Chinese corporation that does not include internationalization plans in its corporate strategy; e.g. Lenovo.

Chinese companies have not always been ‘born global’. The products produced and sold in the country were for many years non-branded. Chinese businessmen simply went for sales and not creation of brand equity. In this regard, Chinese products lacked Intellectual Property Rights which are important for international marketing.

Currently, Chinese businessmen are being encouraged to patent their businesses and products so that it is possible for them to get into the export business when opportunities arise (Cateora and Graham 2005).

The easiest approach into internationalization in China currently would be the network approach which involves the formation of joint ventures and partnerships. In this approach, development of facilities in foreign countries is not required since it makes use of businesses that are already in existence.

The model that best describes the internationalization process in China is the network theory. This is because Chinese firms have not yet established a global presence like most foreign companies. This is the reason Chinese leaders are encouraging entrepreneurs to venture abroad so as to boost their sales.

There has also been slow adoption of branding strategies since most Chinese products and businesses do not have Intellectual Property Rights. This is also the reason why there are a lot of counterfeit products produced and distributed in China.

What is evident in China is more partnerships and joint ventures being formed between Chinese firms and foreign investors. Another reason for this is the cultural differences that make it difficult for Chinese companies to understand foreign markets fully.

This was witnessed in the case of Lenovo which acquired IBM in 2004 but has struggled to do away with IBM brand which was well recognized in North American more than Lenovo. Chinese companies will therefore have to invest in global branding if they are to attain successful internationalization status and creation of global brands.

Reference List

Cateora P, Gilly, MC & Graham, J. L. 2009, International Marketing, 14^th edition, McGraw-Hill, New York.

Cateora, P. & Graham, J. 2005, International Marketing, 12^th edition, McGraw-Hill, New York.

Chi-Hsing, T. & Hsin-Chih, K. 2008, ‘Internationalization and network strategies: Taiwanese firms’ foreign direct investment in China and the U.S.A.’, Journal of Asia Business Studies, Vol. 3, Iss. 1. Web.

Child, J. & Rodrigues, S. B. 2005, ‘The Internationalization of Chinese Firms: A Case for Theoretical Extension?’ Management and Organization Review, Vol. 1, Iss. 3, pp. 381-410.

Doole, I. 2008, International Marketing Strategy: analysis, development & implementation, 5^th edition, South Western – Cengage Learning, London.

Fangfang, L. 2010, ‘Recall may dent Toyota’s brand image, say analysts,’ China Daily. Web.

Geographic Breakdown, 2009. Web.

Moen, O 2002, ‘The Born Globals: A New Generation of Small European Exporters’, International Marketing Review, Vol. 19, No. 2, pp. 156-175.

Oviatt, BM & McDougall, PP 1994, ‘Toward a Theory of International New Ventures’, Journal of International Business Studies, Vol. 25, No. 1, pp. 45-64.

Park, SH & Luo, Y 2001, ‘Guanxi and Organizational Dynamics: Organizational Networking in Chinese Firms’, Strategic Management Journal, Vol. 22, pp. 455-477.

Ritson, M. 2010, Toyota’s Brand Problems Begin At Its Core. Web.

Roberts, D. 2006, Toyota Markets to China. Web.

Siddiqui, H. 2011, What is Toyota’s Branding Strategy that Keeps Toyota at the Top, 7 November. Web.

The Independent. 2010, Toyota tops ranking as world’s best-known Japanese brand. Web.

Tichy N. M., Tushman, M. L. & Fombrun, C. 1979, ‘Social Network Analysis for Organizations’, Academy of Management Review, Vol. 4, No. 4, pp. 507-519.

Toyota, 2012, Toyota Global Strategy. Web.

Click Here To Order Now!