The marketing consultant working with Ashanti marketing solutions has been commissioned by Toyota Motor Corporation which wants to enter a suitable country with a new product or service.
- Provide a macro-environmental analysis for a country through the evaluation of its opportunities and threats.
- A critical assessment of 3 market entry approaches that are suitable for a Toyota while venturing into chosen nation.
- Application of concepts of marketing segmentation and targeted along with presenting critical evaluating the target market for the product.
- Illustrate the Application of Porter's Generic strategy and justify the manner through which Toyota can gain competitive advantages in the market.
Strategies enable and facilitate an organisation to gain better and effective outcome in nature or frame. Strategic marketing is a process where differ kind and number of strategies could be underpin by management in relation with marketing of goods and services. Thus, management need to consider effective and beneficial framework which further assist them in do so which assist in supporting to derive beneficial outcome (Dibb, 2012). This project is based on Toyota which is a one of a famous automotive company in Japan. They want to launch electric car in Romania so that they could become competitive in nature. For this management of a company will going to organise PESTEL so that environment of Romania could be assess. Along with this, better entry modes also get estimated which will enable them in design the things better. Although, market segmentation and targeting will reflect them in choosing the better one. All such things and attribute will going to discuss in this project.
1. PESTLE Analysis of Toyota
Products are the final goods which are sell in market to fulfil demands of customers. The firm, Toyota Motor Corporation wants to launch an electric car in Romania. Reason behind selecting this product to launch is to reduce air pollution, save fuel and protect environment which is very important in current scenario. The project is considered as a profitable one so, firm wants to execute is in Romania.
By the assistance of PESTLE analysis, opportunities and threats of Toyota Motor Company are identified. The firm is a leading player in automotive industry worldwide. Several external factors impact Toyota as well as global automotive sector. By keeping these factors in mind, executives of company should develop programmes and strategies in order to support growth and stability of business (Gerritsen and van Olderen, 2014).
This dimension depicts about the impact of political conditions on operations of firm and determines influence of government on it. In case of Toyota, the important political factors are:
- Political stability in major markets.
- Support of government for eco friendly goods.
- Free trade agreements.
Political stability in Romania market is a big opportunity for Toyota as there is minimal political tension prevails in market and firm can easily attain growth. Free trade agreements in countries where company operates its business has opportunities for enhancing market penetration. Apart from this, eco friendly products are supported by government so, it is beneficial for Toyota to launch their product in Romania.
Organisational development of Toyota is influenced by economic trends. This dimension identifies the effects of change in economic situation of country on business (Harding, 2017). In case of Toyota, the most important factors are:
- Gradual growth of Romania economy.
- Weaker Yen vs. Romanian Currency.
- Fastest growth in developing countries.
It is the opportunity for company to enhance its exports form Japan on the basis of weaker Yen. Firm have also an opportunity to expand and grow their business in Romania. They have the opportunity to improve its revenues in Romanian market as economy of the country is developing and has chances for rapid growth.
The dimension of social factor pertains to the influence of sociocultural trends on operations and business of company. In Toyota, the main social factors that may influence the working of business are:
- Increasing interest of people in electric cars as well as hybrid cars.
- Widening wealth gap.
Firm has the opportunity to administer more goods that satisfy increasing interest of customers in electric and hybrid vehicles. However, firm should considered widening wealth gap as it is a big threat for Toyota because it corresponds to decreasing middle class. For firm, the main source of revenue is middle class. So, widening wealth gap is one of the major concern for Toyota in Romania market (Hunt, 2015).
This factor influence Toyota at large as its business is technological. This force identifies the impact of technological trends or technologies. In case of Toyota, the most notable variables are:
- Increasing use of e-commerce.
- Mobile technology trend.
Company has an opportunity to enhance its capabilities related to e-commerce or to exploit the services of third party e-commerce providers for selling some products like spare parts. Enhancement in mobile apps is also an opportunity for firm to increase loyalty and engagement of customers (Lee and Carter, 2011). The main threat for Toyota in Romania market is cybercrime which involves corporate Cyber espionage.
Ecological concerns needs to be include by Toyota in strategic decision making. It determines concerns related with natural environment. Major environmental factors for company are:
- global declining in oil revenues.
- Climate change.
- Increasing emphasis on sustainability of business.
Firm has an opportunity to administer environmnet friendly products like electric cars in Romania. It also have an opportunity to maximize its sustainability performance by making improvements in efficiency of business process.
It determines regulations and laws that influence business operations. The important factors are:
- Enhancing intellectual property laws
- Increasingly environmental laws
- Increasingly complex consumer laws
2. Different modes of market entry
There are different types of market modes that are available in the market through which company can expand their business operation in a new market of any other country. Each market entry mode is having distinctive degree of risk associated with it which needs to be effectively taken into account by every business owner (Liebl, 2015). The two major type of market entry mode is equity and non-equity. The equity mode encompasses wholly owned subsidies and joint venture and non-equity entry modes includes export and contractual agreements. Some of the common foreign market entry mode are discussed below:
- Exporting: Exporting refers to the process of selling products and services produced in one country to other country. It further categorise into two parts one is direct export and indirect export.
- Direct Export: It is the most common mode of exporting product or services made by home country. This entry mode mainly emphasize on increasing the economies of scale of home country. There is less involvement of distribution network or channel in direct exporting.
- Indirect Export: Under this, exporting process is mainly done through domestically based intermediaries (Meidan, Moutinho and Chan, 2014). There is no control of exporter over their products in the foreign market.
Legal Procedure: Every company who wishes to enter into new market through exporting are bound to follow all legal rules and regulation associated with Romania export ordinance Council Regulation No. 2913/1992. Also company needs to fulfil all legal paper work associated with exporting.
- Joint Venture: It is an agreement that takes place between two or more companies or people to work collectively for a particular purpose or project. All the members under Joint Venture equally shares all profit and loss. Five common objectives of this market entry mode is risk/reward sharing, technology sharing, market entry,conforming to the government regulations and joint product development.
Legal Procedure: Partners of Joint Venture are required to provide all necessary information related with their particular project. There is separate compliance for this market entry mode which every firms is liable to follow. They need to explain what are their purpose behind this project and how it will provide benefit to society and its members.
- Strategic Alliance: It is a form of co-operative agreements that takes place in different companies such as formal joint venture, shared research or minority equity participation. This mode of entry is becoming increasingly popular because of its distinctive characteristics:
- These are mostly occurred between companies in industrialized nations (Meissner, 2012).
- They mainly emphasize on creating new product instead of distributing the old one.
Legal Procedure: In case of strategic alliance, firms needs to express clear strategic goals, specialization, suitable partner, sharing information, staff exchange, operation with long term horizons, flexibility in from of Romania Government. Also the company needs to fill the amendment first concerned with Romania Joint Venture Ordinance.
Recommended market entry for Toyota in Romania:
After analysing different market entry modes it can be figure out that for Toyota can effectively expand its business operation in Romania market through Strategic Alliance. As per the given scenario, Toyota is launching its electric car in the market of Romania. This is the most suitable mode of entry for them because of this market entry mode it will become much easier and convenient for them to introduce its new product in any other new market. As the chosen entry mode mainly emphasize on creating new product or services rather than introducing existing one in the market (O'Malley, Story and O'Sullivan, 2011). Also in addition to that, this market-entry mode help Toyota in gaining high competitive edge over other existing competitors prevailing in the market Romania. As the company is totally new to the market, they ned to collect much detailed information regarding the likes and dislikes of target audience, existing political factors that impact company's overall operation and functions, competition already exist in the market and many other necessary factors. However it become difficult for one single firm to do all these tasks and formulate strategies accordingly. This is the main reason why managers of Toyota have decided to chose Strategic Alliance for the expansion of their business operation and activities. With the assistance of this market entry mode, Toyota with the help of other strategic partner identifies prevailing opportunities in Romanian market and grab it within the stipulated time-frame which enables them to successfully launch or introduce its new product or market in the market of Romania.
3. Concepts of market segmentation and targeting critically evaluate the potential target
Market segmentation is define as process where an organisation used to divide their number of potential customers into various groups, sections and segments with their differ characteristics. Thus, management used to divide them into similar groups, traits and things so that effective and better understanding could be imposed in better frame (Preston, 2012). Hence, an association need to divide their groups into 4 major sections which are define as follow for Toyota whom are going to launch their electric car in Romania so that they could gain and gather effective consideration from them:
- Demographic segmentation: It is a kind of market segmentation where age, group, race etc. It enables in target the market in more better and appropriate manner so that effective understanding could be maintain. Although, Toyota need to divide their customers on the basis of age and group which enable them in producing electric car more accurately. Here, they could design their car by assuming and define market in better and signified manner.
- Behavioural segmentation: It is completely emphasis on buying behaviour of an individual which reflect on the basis of their loyalty, frequency, benefits etc. Before managing activities into new market world, management need to segment their users on the basis of behaviour. Toyota need to understand the behaviour of their users properly before commencing operations into Romania so that beneficial outcome could be assess and define in better frame (Rundh, 2011).
- Psycho-graphic segmentation: It is based on the values, attitude, lifestyle of a consumer where their mind set need to assess properly so that appropriate goods used to deliver to them. Like Toyota previously deal in Japan where hard-working segment individual have attitude towards such aspect but Romania individual might have differ mindset and attitude which need to understand by an organisation effective so that they used to enhance their sales and working options for managing diversification.
- Geographic segmentation: This kind of segmentation rely on countries, boundaries, population density etc. Business used to divide their products and services on the basis of rural, urban areas which simplify and enable in better coordination so that effective and beneficial gain could be underpin which further reflect in better and supportive profitability.
On the basis of define things, it get evaluated that for Toyota when they used to launch electric car over there, demographic segmentation is beneficial for them. Although, they used to target differ age groups individual where the age group of 24 years to 40 years enable them in enhance sale of their car (Sunkada,2014). Although, such age group is profitable for them just because they become self dependent and move towards buying such cars in nature. Hence, to go for a job such kind of vehicle is appropriate and effective for them in order to maintain and enhance their sales.
Romania government wants to launch such kind of plan in a country which enable and support them in reducing environment related issues and problems. This is really critical to understand such section which facilitate Toyota to create a differ image towards society. Thus, with such aspects, management also used to focus on their future plans which simplify and focus on TQM. In this scenario, management will going to focus on producing such kind of products which are beneficial for society as well as reflect less harm to nature. Their future plan completely focus on the geographic segmentation where products used to start manufacturing as per village purpose as well as also target urban population. Henceforth, Toyota could enhance their sales and volume through appropriate target section as well as with effective evaluation of segments of market of Romania (Tomczak, Reinecke and Kuss, 2018).
4. Porter Generic strategy
Strategy is define as core process for an organisation which need to understand by managers of a company. It is really essential for managers to determine the best suited strategy so that they could maintain and manage their working and feasibility in an effective frame. There are various strategies and framework could be opt by management when they used to enter into a define market world so that effectiveness and efficiency could be maintain and manage. For this aspect, the major strategy which could be opt by business managers are Porter Generic strategy model. As per this model, define the ability of an organisation under which they could gain competitive position at define market world. Thus, such aspects could be further evaluated into three major sections which simplify as per the below consideration:
- Cost leadership strategy: One of a major thing which used to opt for each and every business section is competitive advantage or edge which enable them to signify them differ from others. It is really essential to determine the essential aspects and fulfil them in a better manner so that a business could be gain that. The first thing which reflected by Porter generic strategy is cost leadership strategy where business need to produce such goods and services which are low in cost of volume and have a high quality standard as well. Managers required to use such techniques which enable them in reducing the cost of production so that goods could be deliver at moderate and effective rate (Wrenn and Mansfield, 2014). Toyota will going to launch their electric car in Romania for which they want to understand concept of cost. Hence, cost leadership strategy will enable management of Toyota to become cost leader at market world which facilitate them in reducing the value of production and provide electric car at low value as compared with rivalries. This will enable them to become competitive advantage so that effective gain could become possible.
- Differentiation strategy: As per this strategy, management used to produce such kind of products which are differ and vary from their competitors which enable in attracting them better. For gaining success and competitive advantage through differentiation strategy, business required to focus more on research and development plans and options under which better and effective innovation facilitate them to deliver high standard service products. Toyota could go with such aspect in clear manner where they need to focus on products like Electric car which could include about some special features so that better differentiation from competitors could be done in a signified frame (Dibb, 2012).
- Focus strategy: Under this aspect of Porter, business need to clearly focus on new innovation as well as on the concept of cost minimisation. This focus strategy completely focus and enable them to target their working on particular aspect so that better and define outcome could be gain which further assist in providing better and competitive edge.
As per the all three sections, management of Toyota have to determine such attribute which enable them in gain competitive advantage. Like they need to consider focus strategy where targets could be focus properly through better innovation and reducing cost of manufacturing of products and services as well. This will bring down positive outcome for an association which further assist in providing suitable outcome at Romania. Although, they want to launch electric car in better frame for gaining and made them differ from others (Gerritsen and van Olderen, 2014). Thus, management of Toyota have to focus on this section for more effective reflection so that beneficial gain could be reflected.