RAV-4 SUV AX40
Marketing Report of Toyota’s RAV-4 SUV AX40 Model
Instructions:
Prepare a report about one product or service containing information that could be used for a marketing plan.
You can choose a product/service from your own business or from another business with which you are familiar.
In your report you must include information about:
The current marketing situation with background data on the market segments, product, competition, and distribution. Keep this discussion brief.
Market analysis using a SWOT analysis. Make sure to discuss the SWOT analysis adequately.
Objectives with goals for sales volume, market share and profit. These goals should be realistic but may have to be somewhat hypothetical because of the lack of time and absence of market research to provide better ones.
Marketing strategies with details of the 4Ps (i.e. Product, Place, Price, Promotion):
Make sure you explain why the strategies are relevant and how they relate to the market analysis, objectives and goals above. Clearly justify your argument.
In your discussion of Promotion, you need to identify the communication objectives, discuss and justify the communication channels and the communication mix you would use to address these objectives.
Because this is a short assignment, be careful to use your word limit wisely. There is no need to focus on the details of action plans, projected profit and loss figures and controls (although these are important in the real world, of course).
It is important to demonstrate your knowledge about marketing and to clearly reference your sources. Read journal articles (using AIB Online Library), books (including the textbook), and business literature, etc. Note the sources and use them throughout your report.
Note: in a real world marketing plan it is unlikely that you would use referencing. While you might not use referencing in an actual marketing plan, you would definitely source your information from various company/industry reports and from journal articles. In this assignment you are required to make the use of such sources explicit through referencing.
Solution.
Marketing Report of Toyota’s RAV-4 SUV AX40 Model
Introduction
The Toyota’s RAV-4 SUV AX40 model was unveiled in the year 2013 for the first time. It belongs to the fourth generation category of the Toyota’s RAV-4 SUV AX40 model, which features a complete redesign of the previous generational modles. The RAV-4 SUV AX40 is characterized by its unique efficiency in fuel economization as well the as high quality interior functionality. The model was developed by the Kansei design department of the famous Toyota Company. The car is painted deep bronze with a V-shaped outline. The model has sold over 3 million units since its inception in 2013. Even though it has a great command in the global automobile market, it has a number of weaknesses and threats that it needs to carefully savage so as to rapidly improve on its sales.
Current Marketing Situation of the RAV-4 SUV AX40.
Product
The RAV-4 SUV AX40 is a vehicle model that gives its users a good experience. It has an excellent interior functionality which includes good gas mileage and excellent flexibility. Whereas good gas mileage and fuel economy are good strategies to use while targeting consumers from developing countries, most consumers from developed countries are not much concerned about fuel economy but rather a good experience. In this sense, things like the exterior design also come in place. The current RAV-4 SUV AX40 has a deep bronze exterior color which might not be a good experience for female consumers. The model has been equipped with high quality acoustic materials that offer excellent noise cancellation, a technology which many other SUV models do not have. As a result of its unique interior functionality, RAV-4 SUV AX40 is priced higher that other SUV brands (Juan José 2014, p. 7). Generally, RAV-4 SUV AX40 is a good model that has sold well in the global market as compared to other models within the Toyota brand as well as other brands in the global automotive market. The product marketing strategy needs modification as to gunner a majority of the market share.
Market Segment
The main target market for the RAV-4 SUV AX40 are people aged between 25 and 45 years. This cohort represents a group of individuals that are well-informed and aware of any new and unique products in the market. They are also techno-savvy hence form a good target for the model. Most of the Toyota’s returning customers belong to this cohort.
Competition
Main competitors for RAV-4 SUV AX40 are those models manufactured under the SUV design. These include Honda, Hyundai, and Nissan Rogue. They have almost similar features as those of RAV-4 SUV AX40.
Distribution
RAV-4 SUV AX40 is currently selling mainly in the developed countries of North America and Europe. Its production unit has been strategically located in Canada, Ontario, so as to target both the US and the UK, which are main sources of its customers. Previous models of RAV-4 SUV AX40-4 were being shipped directly from Japan, which was rather costly.
Marketing Situation
Currently, RAV4 is the second selling vehicle in the SUV market behind Honda. This is contrary to previous years. In 2014 and 2015, the brand topped the list. Ford SUV, a brand which is younger in the SUV market, has shown threats of beating RAV4 by following it closely at third position with a sales difference of only 5%. However, sales are increasing every year. In 2016, the Toyota sold 352,154 RAV4 units, an increase in sales of 16% from 2015 sales Approximately 50% of the RAV4 units were sold in the US and UK for the year 2016. The brand has a fluctuating market share; share for 2013, 2014, 2015, and 2016 was 1.6%, 1.4%, 1.8%, and 1.6% respectively. The company recorded a 14% increase in profits from 2015 sales. The company predominantly operates in developed countries. The fluctuating market share and declining command in the market (being knocked by Honda) indicates stiff competition.
Market Analysis
SWOT Analysis
The SWOT analysis is a key business analysis tool that outlines the internal and external factors affecting the business. These factors are grouped into; strengths, weaknesses, opportunities, and threats. These factors affect virtually all businesses regardless of the size, geographical location, operating profit margins etc., hence the RAV-4 SUV AX40 is not an exception. However, the magnitude with which these factors place enable a business to succeed or fail varies from business to business. The following is a detailed SWOT analysis of the RAV-4 SUV AX40;
Strengths
Strong brand – RAV-4 SUV AX40 is a product of Toyota, a company which is well-renowned in the automotive industry since its inception in the early 20th century. The company has built a strong customer loyalty, trust, and recognition. Therefore, the RAV-4 SUV AX40, which is one of its many automobile designs, takes advantage of Toyota’s strongly established brand to attract and retain customers from all over the globe.
Pioneer model in the SUV – RAV-4 SUV AX40 was the first C-SUV model. This strength gives the brand its pride and good marketing strategy as the pioneer brand in the SUV segment before other models such as the Honda and Hyundai came on stage. The model was first conveyed to the global market in 1993.
Segment of devoted customers – As a result of the strong Toyota brand that RAV-4 SUV AX40 belongs to coupled with its strength of being the pioneer model under the C-SUV/SUV segment, RAV-4 SUV AX40 has been able to capture a segment of returning customers. These customers are mainly retailers. Therefore, there returning behaviors indicates that the actual consumers are also returning ones (Kotler, P, Keller 2013, p. 8).
Weaknesses
Loss of the model’s share in the global market as a result of upcoming competitors which have specified better features than the RAV-4 SUV AX40.
The low ability of the RAV-4 SUV AX40 marketing department to attract more customers due to the belief in a strong base of returning customers (Juan José 2014, p. 8). Even though returning customers indicate good business operations, attracting and retaining new customers is also essential for any business’ success.
The RAV-4 SUV AX40 goes at relatively higher prices as compared to other SUV models such as the Nissan Rogue. This drives away a majority of the younger target generation which opts for cheaper.
The RAV-4 SUV AX40 model has not been designed in a way that complements the emotional demands of its customers. This drives away a majority of female customers who value emotional aspects such as exterior design colors and general appearance, even though functionality is cool.
Too much concentration on developed countries while leaving out developing countries. In the long run, the shipping prices to developing countries make purchase of this model much more expensive hence driving away a large percentage of consumers in these countries.
Opportunities
Developing countries are adopting new and modern technologies. Incomes among the working middle class are also increasing hence making them opt for better living standards. Since most SUV models have shifted their focus to developed nations, the model should seize the opportunity in the developing countries and enjoy the benefits of being the first SUV model to penetrate these markets.
Threats
Stiff competition from similar manufacturers – There are a number of models that manufacture under the SUV segment. They include Hyundai, Honda, Nissan Rogue, and the Ford. These new models offer a more remarkable driving quality and fuel economy than the RAV-4 SUV AX40, a factor which possess great competition for the younger generation of consumers (Juan José 2014, p. 45)
Strict government regulations – Since the model units are exported to multiple countries, complying with all the government regulations in each of these countries becomes a problem. For instance, the strict environmental laws of the US which govern Carbon (IV) Oxide emissions by imported vehicles threaten prelaunch of newer RAV-4 SUV AX40 brands that exhibit fuel economy and better driving quality at the expense of environmental sustainability.
Objectives and Goals
The main objective of this report is to come up with a marketing technique that will assist the RAV-4 SUV AX40 brand to wade off its competitors and gunner the largest share in the global automotive market. This will be achieved mainly through closing the gap between RAV-4 SUV AX40 and its direct competitors in the SUV segment. Other objectives include;
- To achieve a 20% increase in sales for the year 2017; improving the sales from the 350000 figure to 400000 figure.
- To achieve a 20% increase in profits for the year 2017.
- To achieve a 2.0% market share from the current 1.6%.
In order to achieve these objectives, a good marketing strategy is need. The next section discusses the marketing strategy that will be adopted in marketing the RAV-4 SUV AX40 brand.
Marketing Strategies
Product
In order for a firm to command a larger share of the market for a given specific product which is being manufactured by some other firms, it must ensure that its product is of superior quality and offers uniquely excellent customer experience (Kotler P et al 2012, p. 7). Apart from good marketing strategies, product itself determines customer attraction and retention (Florin, H & Frishammar, J 2012, p. 23). Dimensions that make a product outstanding include its design, features, warranties, and benefits. In order for any marketing strategy to be employed effectively for the RAV-4 SUV AX40, the product must be relaunhced with newer and better features that provide good customer experience.
First, the product should offer better exterior design features which appeal to most of the consumers in developed countries who are looking for a better experience with their product (Florin, H & Frishammar, J 2012, p. 22). The exterior deep-bronze color does not appeal to most female consumers hence its prelaunch must include a better colors such as such as light-red. The external design should also include chrome lips and side chills which give RAV-4 SUV AX40 a young and refreshed image. This will not only appeal to most female consumers but also members of the generation Y cohort which are currently its target consumers.
Members of generation Y cohort are also techno savvy (Rowley, J 2012, p. 522), hence RAV-4 SUV AX40 will have to provide the experience of a technologically advanced world. This technological environment can be achieved by fitting a multi-media Toyota touch in the RAV-4 SUV AX40. This is a smart engine touch which allows car starting and stopping just at the press of a button. This product design strategy will attract most of the younger generation not only in developed countries but also developing countries where technology is equally embraced and advancing at a similar rate (Jean-Noël Kapferer 2012, p. 21).
Product diversification is also necessary so as to meet the customized needs of wide range of consumers worldwide. For instance, the UK and US have consumers who value quality and experience of a product as long as the price suites these features. On the other hand, consumers in other countries might find it very difficult to purchase a RAV-4 SUV AX40 with advanced features such as the multimedia touch proposed above. As a result of this discrepancy, RAV-4 SUV AX40 should be diversified so that developing countries receive more of the cheaper models with less advanced features (Thomas T. et al 2011, p 22). This will assist the company to penetrate the market in the developing countries. In the long run, it will outdo its competitors which have minimized exports to these countries due to market uncertainty (Jankovic, M 2012, p. 91).
Place
Marketing channels are means through which a product or a service reaches the required destination of targeted consumers (Kotler, P et al 2013, p. 43) and (Keller, Kevin Lane. 2008, p. 31). Most manufactured products are mainly dispatched and distributed through dealers. Likewise, RAV-4 SUV AX40 has its dealers who purchase the brand from Toyota and sell it to sub-dealers and wholesalers. Finally, wholesaler’s sale to retailers and then the final consumers (Kotler, P et al 2013, p. 24). The supplying side must be analyzed effectively to obtain a fundamental understanding of how manufacturers, dealers, wholesalers, and retailers take part in the marketing channels to create the desired outputs required by their end-users. Since the product goes through a number of channel flows before reaching the final consumer, its place becomes an important determinant in the final price with which intended consumer will purchase the product (Hong, S-Y 2012, p. 112).
RAV-4 SUV AX40 manufacturing plant is located in Canada, Ontario. It has been strategically located to capture the automotive market in the developed countries of North America and Europe, particularly the United Kingdom. However, since the product is mainly dispatched through dealers, shipping to the United Kingdom and other sections of the European market becomes relatively costly. This report proposes that main depots for RAV-4 SUV AX40 spares as well as complete products should be located in the heart of the European continent so as to serve the whole of Europe as well as some sections of Asia and Africa. The larger the distance from the main manufacturer, the higher the shipping costs and channels through which the product goes through. In the long run, consumers in other sections of Europe other than the UK, and some sections of Asia such as China (which is a potential market), receive the final product at relatively higher prices due to channel transition ‘profit needs’. This poor strategy has made Honda, the Indian manufacturer, to take over a large section of the global market in Asia and some parts of Europe as well. To wade off this competition, RAV-4 SUV AX40 should establish depots in both the northern and southern sections of Europe. This will pose a strong competition to Honda and Hyundai SUV manufacturers. Since RAV-4 SUV AX40 will have improved its product, it will be at a better place commanding the market share in these regions.
The problem of ‘channel profit needs’ also affects market penetration (Hong, S-Y 2012, p. 23) in the developing countries of Africa and Asia. In order to attract a majority of consumers in these countries, the pricing strategy plays an important role. However, since the price shoots considerably due to ‘channel profit needs’, the final consumers have to pay relatively higher amounts for this product. This kills their morale. The depots will significantly reduce the number of channel flows through which RAV-4 SUV AX40 has to go so as to reach consumers in these countries. As a result, price will significantly reduce hence enable the company to attract and retain a majority of the consumers.
Price
There is no other weapon in the manufacturing sector that has the power to boost product sales than a good pricing strategy (Rowley, J 2012, p. 522). Pricing actually determines what amount the final consumer will have to pay for the product. It also determines what profits the manufacturer will obtain. RAV-4 SUV AX40 has relatively higher prices as compared to other SUV models. In order for the brand to acquire more sales and a share of the global market, it should maintain the price but improve product exterior and interior design. From the consumer’s perspective, higher prices portray a higher quality model. If this perspective is fulfilled through actual experience, the brand will acquire a majority of the rich class consumers in developed countries. As for the developing countries, diversification will assist the company to manufacture models which suit consumers’ willing prices. Diversification of the RAV4 model will lead to production of RAV4 units which are more affordable to most consumers in developing countries.
Promotion
Marketing communication objectives;
- To reach out to a majority of millennials who are potential buyers in all corners of the world.
- To reach out to the potential market in developing countries through elimination of a perceived high RAV4 price.
Main target audience of RAV-4 SUV AX40 are men and women aged between 35 and 45 years. This is an economically stable and techno-savvy cohort. In order to perform excellent promotion, RAV-4 SUV AX40 will need to make use of social media advertisements. This cohort represents people who are fond of technology and the internet, especially social media. Social media such as Facebook and Tweeter transmit information faster hence it will be effective to reach out on potential customers all over the world (Heymann-Reder, D 2012, p. 4). The brand can also make use of TV and Radio e.g. the BBC to attract these consumers. The BBC and CNN, for instance, are worldwide radio and television networks respectively hence the company will be assured of reaching out to a majority of potential RAV4 buyers all over the world within a short period.
Conclusion
RAV-4 SUV AX40 is a well-established Toyota brand which currently follows a marketing strategy that exposes it to a number of emerging competitors such as Honda and Nissan Rogue. The main objective of this report was to come up with information which will assist the brand to wade off this competition, increase its sales, and improve on its profit margins. The report has employed the marketing mix concept of place, product, price, and promotion to come up with information which can be used to design a marketing strategy for the brand.
References
Florin, H & Frishammar, J 2012, ‘Managing the front end of new product development’, California Management Review, vol. 54, no. 4, pp. 20–43
Hong, S-Y 2012, ‘Smart pricing strategies for services’, SERI Quarterly, vol. 5, no. 4, pp. 100–105.
Jankovic, M 2012, ‘Integrated marketing communications and brand identity development’, Journal for Theory and Practice and Management, no. 63, pp. 91–100.
Jean-Noël Kapferer, The New Strategic Brand Management, 5th edition, 2012, Kogan Page, pp. 15 – 29.
Juan José Varea Ponce. (2016). Toyota RAV4 Model Year Marketing Plan for the U.K. http://studylib.net/doc/8084859/toyota-rav4-model-year-marketing-plan-for-the-uk
Kotler, P, Keller, KL, Ang, SH, Leong, SM & Tan, CT 2013, Marketing management: an Asian perspective, 6th edn, Pearson Education South Asia Pte Ltd, Singapore; (ISBN: 9789810687977).
Kotler P, Kevin Lane Keller (2012), Marketing Management, 14th ed., Pearson Prentice Hall, p. 8
Keller, Kevin Lane. 2008. Strategic Brand Management, Pearson Education, Inc., Upper Saddle River, New Jersey p.31. http://www.kvimis.co.in/sites/kvimis.co.in/files/ebook_attachments/Keller%20Strategic%20Brand%20Management.pdf
Rowley, J 2012, ‘Evidence-based marketing: a perspective on the “practice–theory divide”’, International Journal of Market Research, vol. 54, no. 4, pp. 521–541.
Thomas T. Nagle, John E. Hogan, Joseph Zale (2011), The Strategy and Tactics of Pricing, 5th ed, Pearson Prentice Hall p. 47 Marketing Management Text-book.
Toyota Motor Sales Reports December 2016 and Year-End Sales. http://www.prnewswire.com/news-releases/toyota-motor-sales-reports-december-2016-and-year-end-sales-300385516.html
Heymann-Reder, D., 2012. Social Media Marketing. Addison-Wesley Verlag. pp. 4.