LU WANG

MKT 11
Prof. Wei Zhang
3/9/11

Case Memo #3: Toyota Prius

1. What buyer value is created with the hybrid powertrain as implemented in the

Prius?

The Prius offered an expected 100% increase in fuel economy over 14km/liter of a

similarly-sized conventionally-powered car. As the president says, “Consumers are

smart. They recognize the threat that pollution and global warming present to them

and their children.” The value of the buyer is basically envionment protection, cost-

effective, fuel economical, etc. Besides, the comsumers also demand for a larger,

powerful, spacious and family-welcomed vehicle.

2. How attractive is the automobile industry? Does the hybrid powertrain technology

make the industry more or less attractive? Why?

The autobonile industry is very attractive. With development of the leaving standard,

the demand for automobiles are rapidly increasing. The United States was the largest

mational market with about 9 million new registrations, followed by Japan, with over

4 million registrations at 1994. Besides, the indroduction of new technologies has

improved the improvement of the industry, and that also pushed the demand for

vehicles. The competition inside the industry has become more and more fierce. At

the same time, more and more companies and people want to get into the market as

well.
The hybrid powertrain technology has defeinitely made the industry more attractive.

Because to the whole industry, the new technology means both oppurtunities and

challenges to them. On one hand, it provides a whole new vista for automobile

market, other companies will come up with new ideas or strategies to bring new

energy to the vehicles and make hybrid cars. On the other hand, since the technology

was not that mature in the industry, companies should work harder on that to adjust or

change their products to improve the skills and technology.

3. Why is Toyota pursuing the Prius project? What factors are important to make this

project a success?

While the introduction of Prius involved a lot of risks and costs, it promised long-term

sterategic benefits. Through the introduction of Prius, the company could make a clear

statement on its commitment to envionmental protection and generate excitement

about the company’s products and innovative capacities that had been missing for

many years. These benefits would be maximized if Toyota was first to the market.

Because Prius is a hybrid brand with new techhnologies, it opens up an whole new

perspective of the automobile market which is like a turing point to Toyota company.

In order to make this project a success, many significant factors are involved. For

example, the improvement of the hybrid powertrain technology should be done

immediately, especially the improvement of performance of the batteries and tp get

ready for mass production. He should also think about the strategies that can compete

with other automobile companies, including the design, distribution in domestic and
International market, etc. The pricing the the production volume should also be

considered one of the factors.

4. Should Okuda push for an acceleration of the Prius launch?

I don't think Okuda should push for an accelaration of the Prius launch. Because

lauching a new car is a tough process, particularly, it’s a car with hybrid trainpower

technology. Acceptance in the marketplace would depend on the reliability of the new

vehicle and the perceived risk associated with a new technology. The if there is a

technological problem, the issure would not be limited to the particular model; it

could seriously damage the reputation of the Toyota brand. I think before the launch,

the company should take enough amount of time to do market survey, design the new

marketing stretegies and improve the hybrid technogy.