Professional Documents
Culture Documents
The Delhi Auto Expo is a trade exhibition of automobile and auto component makers
organized once every two years at New Delhi. It is organized by the Auto Component
Manufacturers Association, Confederation of Indian Industry, and the Society of Indian
Automobile Manufacturers. The Delhi Auto Expo 2010 was held from January 5 to January
11, 2010. The total number of participants was 2,105 comprising, amongst others, 42
vehicle manufacturers and 1,754 auto component manufacturers.
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Background Note
The history of Toyota3 can been traced to the 1930s when Kiichiro Toyoda, son of
Sakichi Toyoda, the promoter of Toyoda Automatic Loom Works (TALW4), started
working on a small engine run on gasoline. This was followed by the setting up of an
automobile division at TALW. An independent entity by name Toyota Motor Co. Ltd.
(TMCL) was established in 1937. The first plant of TMCL, established at Honsha,
Japan, commenced production in 1938. During World War II, TMCL was primarily
engaged in the manufacture of trucks for the Japanese army. By 1950, the company
was on the verge of financial bankruptcy and faced crippling labor disputes. Under the
changed leadership of Taizo Ishida, TMCL successfully weathered the storm and
emerged a much improved organization. In 1957, for the first time, the export of
Toyota cars (Crown brand) to the USA began. A new entity, Toyota Motor Sales
U.S.A. Inc. (TMS), was formed in the same year to concentrate on the U.S. market. In
1965, TMCL received the coveted Deming Prize 5 for the significant breakthroughs it
had achieved in quality improvement. In 1966, the Corolla6 brand was launched. In
1967, TMCL entered into a strategic business partnership with Daihatsu Motor Co.
Ltd.7. In the year 1982, TMCL and TMS were merged into a single entity, Toyota
Motor Corporation (TMC). In 1989, the Lexus8 brand was first introduced in the
USA. In 1997, TMC introduced the Prius9 range of hybrid cars10.As of 2011, TMC
was the largest automobile maker in the world in terms of sales and production. Its
sales revenue was US$235.89 billion for FY 2011.vi And Toyota vehicles were being
marketed in more than 170 countries worldwide. vii
Toyota entered India in October 1997 with the formation of a joint venture with the
Kirloskar Group.viii The two parties held a stake of 89 percent and 11 percent,
respectively, in the joint venture, Toyota Kirloskar Motors Limited (TKML). The
first product to be launched by TKML in India was the Qualis, a Multi Purpose
Vehicle (MPV). The Qualis was introduced in January 2000 and, by the end of that
year, was the leader in the MPV segment, having sold over 21,000 units. ix In 2002, the
company ventured into the luxury car segment with the launch of the Camry. x In 2003,
TKML came out with its offering in the premium car segment, the Corolla. The
3
4
5
7
8
9
10
Toyota is the word used in common parlance to refer to TMC or any of its car subsidiaries
worldwide.
TALW was a manufacturer of weaving machinery.
The Deming Prize is one of the worlds most prestigious awards given in the field of quality
control.
By 2009, Corolla had become the largest selling car in the world with over 0.9 million
annual unit sales. (Source: www.caradvice.co.au)
Daihatsu Motor Co. Ltd. is one of the oldest Japanese car manufacturers.
Right from the beginning, Toyotas strategy was to develop Lexus as a premium brand with
nominal association with the parent brand. As of 2011, the Lexus range of cars has
dedicated design, engineering, and manufacturing
facilities. In the year 2010, the Lexus
range of cars had total sales of 0.28 million units in the Japanese, European, and the US
markets . (Source: Wikipedia)
By 2010, the worldwide sales of Prius had crossed 2 million units.
Hybrid cars are fuelled by two or more distinct sources of power, typically an internal
combustion engine and one or more electric motors.
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Why Etios?
On December 1, 2010, TKM launched the Etios sedan in the Indian market. The Etios
sedan and the yet-to-be-launched hatchback Etios Liva, both built on the same
platform, were designed specifically for the emerging markets, with both being
launched first in India (Refer to Exhibit I and Exhibit II for images of Etios sedan and
Etios Liva). Toyota officials claimed that the Etios was the result of the collaborative
work done by 2000 engineers from Japan and India over a period of four years. xx At
the time of the launch of the Etios sedan, TMC President Akio Toyoda had said,
"India is a key market for our overall strategic growth plans, and the launch of the
Etios is definitely a milestone not only for Toyota in India but for Toyota globally." xxi
Exhibit I
Source: www.indiancarsbikes.com
According to industry experts, the importance of the Etios sedan and hatchback to
Toyotas larger game plan could not be overemphasized. According to them, the
growth rate of the car markets in the developed countries, where Toyota had a
significant presence, was slowing down whereas the car markets in some of the
emerging countries, with India featuring prominently amongst them, were waiting to
explode. Hiroshi Nakagawa, the Managing Director of TKM, had said, Most of our
products are sold in developed market like US, Japan, Europe, but one cannot expect
exponential growth from these markets. They will be very stable markets, but markets
like India, China, and Brazil are the future, especially India where we dont have
much presence. Limited presence also means huge opportunity for us.xxii Toyota
officials expected the Indian car market to grow at the rate of 10% per annum as
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Strategic Marketing
against the global annual growth rate of 5%.xxiii The Society of Indian Automobile
Manufacturers (SIAM11) expected the annual car sales in India to increase from 1.53
million units in the financial year 2010 to 3 million units in the financial year 2016.xxiv
Though the existing products offered by TKM were best sellers in their respective
categories, they were present in categories that comprised just 15 percent of the Indian
car market.xxv As against a market share of 3 percent in 2010, TKM wanted to capture
a market share of 10 percent by 2017. xxvi With the Etios sedan and hatchback, TKM
would be present in more than 45 percent of the market. xxvii
Exhibit II
Source: www.rediff.com
Another reason, according to analysts, was that TMCs position as the worlds largest
automobile manufacturer was being threatened by Volkswagen AG (VAG 12). TMC
had clocked annual vehicle sales of 8.42 million units worldwide in 2010 as against
7.14 million units sold by VAG. xxviii VAG was also banking heavily on the Indian
market with two best sellers, the Polo and the Vento. Hence, TMC needed a major
boost in the Indian market to stay ahead of VAG. Moreover, TMCs image in the
western markets, as a manufacturer of quality cars had taken a beating after some of
its cars were recalled due to problems in acceleration, braking, etc. From September
2009 till November 2010, TMC had recalled 11 million vehicles worldwide. xxix
However, this did not have a discernable impact on Toyotas image in India and some
of the other emerging car markets due to its relatively small presence in these markets.
Hence, Toyota expected these markets to warm up to it, despite the recalls, if it
pitched in with the right products.
11
12
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Source: www.dwsauto.com
In January 2010, TKM displayed the concept-cars13 of the Etios, in both the sedan and
hatchback versions, at the Delhi Auto Expo. Simultaneously, TKML created
excitement for the products on the Internet with the launch of Etios ads on Facebook 14
and Twitter15.xxxii This was followed by the Toyota Q World Shows. These were
two-day shows held by TKM from January to August 2011 in 24 cities across
India.xxxiii At these shows, the Etios concept sedan and hatchback were displayed
along with some of Toyotas existing offerings in India like the Prius, the Prado
Diesel, the Land Cruiser and the Fortuner (Refer to Exhibit IV for images of the
Toyota Q World Show).xxxiv Toyota officials claimed that the main aim of these
shows was to take the Etios concept directly to potential customers, to enable car
enthusiasts to experience the entire range of TKMs product offerings under one roof,
and to listen to customers regarding the improvements they desired in Toyotas
products and service levels.xxxv
13
14
15
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Strategic Marketing
Exhibit IV
Source: www.automotivehorizon.sulekha.com
At these shows, the concept of World First, India First was widely publicized to
drive home the point that the Etios had been developed specifically for India only,
incorporating the particular needs of the Indian customers and that it would be a
matter of time before such a world class product was launched in other parts of the
world.xxxvi Experts reckoned that in addition to engaging a number of car enthusiasts
and creating visibility for the Etios, TKM was looking at the Toyota Q World
Program to develop a critical mass of customers for the Etios. xxxvii According to
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Sandeep Singh (Singh), Deputy Managing Director, TKM, a significant result of the
Q World campaign was that Toyotas brand recall16 in the top ten cities had moved
one notch higher from number three to number two. According to Singh, there were
two more discernible benefits that TKM had derived from the campaign. One,
improvements were made to the car as a result of the feedback given by 1200 visitors,
and, two, of the 150,000 visitors to the shows, 54,000 potential customers had elicited
a strong desire to buy the car. xxxviii
TKM resorted to symbolism to drive home the point that Etios had been specifically
designed with the Indian customer in mind. First, the Etios logo was created with the
word ETIOS written in bold and the alphabet I in ETIOS shaped like the
traditional vermillion worn by Indian women, that signifies the good things in life
(Refer to Exhibit V for an image of the Etios logo). Second, the last day of the Q
World campaign was held at Surat, Gujarat, on August 15, Indias Independence
Day.xxxix
Exhibit V
Image of the Etios logo
Next in the run-up to the launch of the Etios was the Q Promise ad campaign by
TKM. This campaign was rolled across the print, television, and digital media and
lasted between August and October 2010.xl It was aimed at promoting the overall
ownership experience of the Toyota automobiles (Refer to Exhibit VI for images of
the Toyota Q Promise advertisements). The first ad emphasized the production of
quality cars by TKM which was achieved through the legendary Toyota Production
System (TPS17). The ad also explained how TPS was augmented by TKM keeping all
the parties in the value chain, including employees, suppliers, dealers, and customers
happy.xli The second ad emphasized the delivery of quality service by TKM through
express maintenance in 60 minutes, round-the-clock help in case of a breakdown, and
a 3 year/ 0.1 million kilometer service warranty.xlii The third ad emphasized quality
driving experience for the TKM customer because of the deployment of the latest
technology.xliii According to TKM officials, a thread or dhaaga that featured
prominently in all these ads, symbolized the companys reiteration of its commitment
to quality and its Customer Comes First philosophy. xliv
16
17
Brand recall is the extent to which a customer can recall a specific brand when he/she is
given the related product category.
TPS aims at enabling the production process to deliver maximum value by smoothening it
out through elimination of waste and inconsistencies.
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Strategic Marketing
Exhibit VI
Images of Toyota Q Promise Print Ads
Contd
184
Contd
Source: www.toyotabharat.com
Toyota Classics is a cultural program that has been organized by Toyota since 1990.
The Padmashree is the fourth highest civilian honor given by the Government of India.
CRY is an Indian non governmental organization that works for the betterment of
underprivileged children in India.
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Strategic Marketing
Source: www.kokkada.com
Q Promise to Dealers?
In the run-up to the launch of the Etios, TKM also strengthened its distribution
network. Its sales and service network was increased from 60 dealerships in
September 2010 to 130 dealerships by the end of November 2010. xlixl An alluring
proposition for potential Toyota dealers was the higher margins on offer. As against
the prevailing margin of 3 to 3.5 percent on cars offered by its competitors, TKM
allowed its dealers to retain a 4 percent margin, and as against the industry norm of 15
percent margin on spares, TKM allowed its dealers to retain 18 to 20 percent. li
Source: www.facebook.com
The Etios Liva was launched on June 27, 2011, priced between Rs.399,000 and
Rs.599,000, ex-showroom Delhi .lv It was advertised as a Q Class Hatch. Post the
launch of the Etios Liva, TKM ran an online campaign on its website,
www.myqclassexperience.in. Users could log on to this website and describe in 100
words their experience of driving an Etios sedan or an Etios Liva. Twenty of them
were to be gifted with a Q Class Experience tour of the Etios manufacturing plant in
Karnataka, India.
Q Class Results?
The impact of TKMs brand building exercise for the Etios can be gauged from the
fact that within the first 15 days of the launch of the Etios sedan, it had registered
12,000 bookings.lvi Yoshinori Noritake, TMCs Chief Engineer, was reported to have
said, The number of orders is far bigger than I personally expected. We dont even
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have the car in our showrooms yet.lvii In the first eight months of its launch, the Etios
sedan sold 25,267 units (Refer to Exhibit IX for month wise breakup of sales).
Perhaps, Singh summed up the mood in the company best when he said, It has far
exceeded our expectations and is a tribute to the team and its marketing effortsThis
(Q World) initiative played a big role in the bookings response to the Etios. Many of
these people are first time Toyota customers and this reflects the strength of the
brand,lviii he added.
Exhibit IX
However, some experts felt that there was an over-the-top emphasis by Toyota on the
superior quality of the Etios cars which might come back to haunt the company. For
example, when Singh was asked how he expected Toyota to compete with established
players in the small car market, his first statement was Etios had already brought
about a quality revolution in the Indian market. lix This contrasted with the sense of
disillusionment that many of the customers and car experts felt with the end products,
especially the quality of the interior plastics. A car enthusiast, who had reviewed the
Etios sedan on an automobile website, felt that there was nothing Q-Class about the
cars interiors which he found were of very poor quality. His final verdict was that
Toyota should invest less on its promotional campaigns and more on improving the
interiors of the car.lx A reviewer on a respected Indian auto website had this to say
about the loose ends in the Etios sedan, Frankly there are bits and pieces inside the
cabin that come straight out of a commercial vehicle. The gray plastic is tacky. It
reminded us of the journey we once undertook in a Tata Ace while our college bus
broke down. The rear door panel was wobbling about, and with a little muscle, could
have been dislocated. Even the top-end model shown at the launch had seats covered
with felt. The center console looks like a sticker. The sound while closing the door
wasnt reassuring. This is by no stretch of imagination a Quality cabin. This perhaps
is the worst cabin in its segment. lxi He wondered why TKM had created so much of
brouhaha about Etioss quality when it was not evident from the interiors.
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In a review about the Etios Liva on the same website there was similar criticism, The
dashboard is straight from the Etios (sedan) with no quality improvements. You get
the same recycle grade plastic quality on the inside. lxii An Etios Sedan (petrol
version) owner complained about its poor exterior paint quality and inferior acoustic
insulation. The irate owner pointed out that he had shelled out extra for petrol and that
he had ended up with an engine that was noisy as the diesel one. lxiii A car enthusiast
after taking a first-hand look at the Etios Liva commented that the plastics used for the
interiors were of the recycled grade.lxivA disappointed owner of the Etios sedan felt
that TKM had taken the Etios customers for a ride and wondered whether the
company had questionable quality class on its mind when it spoke of quality
revolution.lxv It was also widely believed that the overall build quality of the Etios
had been compromised.lxvi Some of the customers who had initially booked the Etios
sedan, buying into the Toyota brand, cancelled their bookings subsequently due to the
absence of features in the car.lxvii Experts felt that this mismatch between the
customers expectations, which had soared as a result of Toyotas aggressive
promotional campaign, and the ground realities showed up in how the Etios cars
performed in the market. Etios Liva had clocked sales of 2,551 units in July 2011, the
first full month since its launch, which industry experts felt was a lukewarm response.
The Etios sedan did register reasonable sales of 4,095 units. lxviii In August 2011, while
the Liva registered sales of 2,824 units, the sales of the sedan version had fallen 34%
to 2,708 units.lxixlxx This drop in sales was of course partly attributed to the expected
launch of diesel versions of the Etios sedan and Liva. These were subsequently
launched on September 9, 2011. The state of things for Etios could perhaps be gauged
from the reduction in TKMs sales expectations for the Etios line. In June 2011, TKM
announced that it targeted sales of 140,000 for the Etios line in 2011. In September
2011, TKM revealed that it was on line to achieve sales of only 135,000.lxxi
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Strategic Marketing
Endnotes:
i
Rahul Sharma, Its Time to Jump Up, www.financialexpress.com, July 20, 2010.
ii
iii
Jaishankar Jayaramiah and BV Mahalakshmi, Etios Logs 8,100 bookings in Just One
Week, www.financialexpress.com, December 10, 2010.
iv
vi
http://en.wikipedia.org/wiki/Toyota
vii
http://toyota.eu/about/Pages/toyota_world.aspx
viii
ix
xi
2012 Toyota Corolla Altis Launched in India, www.bharathautos.com, June 17, 2011.
xii
xiii
www.knowindia.net/auto.html
xiv
xv
xvi
Chanchal Pal Chauhan, Robust December Sales Set the Tone for Autos Cos,
www.articles.economictimes.indiatimes.com, January 2, 2011.
xvii
Toyota Land Cruiser Diesel Launched in India, www.zimbio.com, June 10, 2009.
xviii
xix
xx
xxi
Anirban Chowdhury, Santanu Chodhury and Dhanya Ann Thoppil, Toyotas Etios
Makes Global Debut in India, online.wsj.com, December 1, 2010.
xxii
Preethi Chamikutty, Toyota Betting Big on Markets Like India to Fuel Growth,
www.articles.economictimes.indiatimes.com, March 9, 2011.
xxiii
http://indianautosblog.com/2010/06/toyota-etios-coming-early-2011-india
xxiv
Anirban Chowdhury, Santanu Chodhury and Dhanya Ann Thoppil, Toyotas Etios
Makes Global Debut in India, online.wsj.com, December 1, 2010.
xxv
xxvi
xxvii
Murali Gopalan, Toyota Unleashes New Campaign to Keep Etios Momentum Going,
www.thehindubusinessline.com, August 25, 2010.
xxviii
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xxix
Sridhar Chary and Shally Seth, Toyota Launches Etios Sedan at Below Rs 5 Lakh,
www.livemint.com, December 1, 2010.
xxx
xxxi
http://www.indimoto.com/blog/page/60/
xxxii
xxxiii
http://toyotaetios.in/qworld.htm
xxxiv
Toyota Q World Fair on March 20, 21, www.deccanherald.com, March 18, 2010.
xxxv
xxxvi
http://auto.oneindia.in/news/2010/06/toyota-etios-q-world-hatchback-cars-210610.html
xxxvii
xxxviii
xxxix
xl
xli
http://www.toyotabharat.com/Images/q-promise1-big.jpg
xlii
http://www.toyotabharat.com/Images/q-promise2-big.jpg
xliii
www.toyotabharat.com/Images/q-promise3-big.jpg
xliv
xlv
xlvi
xlvii
Shrawan Raja, Etios to be Launched on Dec 1st; AR Rahman its Brand Ambassador,
www.indianautosblog.com, October 18, 2010.
xlviii
Shrawan Raja, Learnings from Toyotas Press Conference Press in Mumbai Today,
www.indianautosblog.com, December 7, 2010.
xlix
li
lii
Preethi Chamikutty, Toyota Betting Big on Markets L\like India to Fuel Growth,
www.articles.economictimes.indiatimes.com, March 9, 2011.
liii
liv
Amit Bapna, New Page View? How Digital Impacts Not Just Marketing But Other
Facets of Business, m.economictimes.com, July 13, 2011.
lv
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Strategic Marketing
lvi
Kaustubh Shinde, Nano Didnt Flood the Streets, Toyota Etios Certainly Will,
www.indianautosblog.com, December 17, 2010.
lvii
JAPAN: Indians Order 12,000 Toyota Etios, www.just-auto.com, December 15, 2010.
lviii
lix
lx
lxi
lxii
lxiii
lxiv
http://www.zigwheels.com/upcoming-launches/toyota-etiosliva-diesel-comingsoon/9419
lxv
Jayessh S Nanavati, Toyota Kirloskar Motor - Toyota Etios -The Questionable Quality
Car, www.icomplaints.in, April 11, 2011.
lxvi
lxvii
lxviii
Shrawan Raja, Toyota Registers an Awesome 99% Growth; Liva Petrol Fails to
Impress, indianautosblog.com, June 30, 2011.
lxix
lxx
Roshun Povaiah, Toyota Etios Sales Drop 34% in August in Anticipation of Diesel
Variant, www.dwsauto.com, September 8, 2011.
lxxi
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