Toyota Yaris
2005 – 2008 Marketing Plan
Make It New
Abstract
Toyota, the top-ranked car maker in the world, will be launching the Yaris as its global gateway and
youth-centered car. Originally designed as Toyota’s “Europe” car, the vehicle’s profound success in Europe
and Japan promises similar success in critical world markets such as the U.S. and China. But were that life
were so easy. The CSF target market driving the success of the vehicle in Europe and America – married
women – are not the most promising targets in Taiwan (and by extension, China), and the U.S. Rather, the
Yaris promises to become Toyota’s wedge into the Generation Y market in the United States and the youth
market in Taiwan – and by extension, China – and create lifetime Toyota consumers in these leading
markets.
But, despite the will, Toyota doesn’t seem to have the way to capture this coveted market. So we’re
putting all bets off the table. Breaking with venerable Toyota tradition, and many of the rules of car
marketing, we’re going to create a worldwide position, to borrow from Ezra Pound’s famous dictum, our
marketing mantra with the Yaris is to “Make It New” in every sense of the word. Our goal is to create a
product, a message, and a marketing mix that is ever changing, ever new, and quickly responsive the needs
and creativity of our customers. It will be the gravitational center of immense and volatile marketing and
buyer creativity.
The first section of this report outlines the marketing success of the Toyota Yaris in its lead market of
Japan. Presented in the format of a marketing plan, it is a descriptive and historical document that outlines
how the marketing strategy and mix has transformed the Yaris into a marketing success, albeit one with
limitations becoming more visible and more evident.
Our second section outlines the often rebellious marketing plan for capturing the Generation Y, female,
and boomer market in the United States. The entire marketing plan is built from the “make it new” strategy
that is designed to keep the Yaris exciting, new, and an ever-changing mark in the American market.
Our third section takes on the Taiwan market by building on changing lifestyle patterns among women
and youth. Seen as a leading market preceding a China-wide launch, the Taiwan plan combines the best of
the Japanese marketing success with the “make it new” aspects of the American plan.
Our fourth section returns our sights to the Japanese market. While the vehicle has been a profound
success, decline in sales indicates that its novelty is wearing off. By adding Japanese youth as a target market,
we can realize great advantages from the dynamism of the marketing efforts in Taiwan and the U.S., making
the Yaris the car to watch in Japanese culture.
Our appendix lays out the bread and butter of our “Make It New” marketing campaign – international
timeline, national market budgets, revenue, and profit forecasts, and rule-breaking organizational principles
we call “centralized entrepreneurship” and “Z-teams,” to realize the highest level of creativity in reaching the
youth market of three very different countries.
The United States
Abstract
In the U.S., we will focus on three major market segments – young first-time new car buyers, twenty- and
thirty-something women, young and middle aged childless or single child couples, and baby boomers (yes,
boomers; read on, gentle reader) – by pursuing innovative, explosively creative promotion and product rollouts
and an edgy promotion campaign with significant media presence, entertainment presence, and untried formats.
Our product and promotion will create a charismatic, ever-changing personality for the Yaris which we will
brand as Toyota’s “personality” gateway car to seize market share early and often – the eventual goal is for
the Yaris to achieve 15% of the subcompact market in three years with a constant, decade-long market share
growth rate thereafter of 10%.
Here’s the rub: every other automaker and their cousin are actively trying to get a piece of the Generation
Y market with their own gateway cars. Like Toyota, these manufacturers are all reading the same market
research that shows, in marketing research’s eminent tradition of precision, that between 15% and 60% of
new car buyers in their 20s will stay with their original brand through their next three to four car purchases.
But it’s a gold strike that hasn’t yet panned out; efforts to capture the Gen Y market since the late 1990’s
have been, to be short, disappointing. Generation Y-targeted car models, particularly B subcompacts, have
either bombed (Aveo, Echo) or found a market in an older demographic (Neon, Element, Scion xA & xB).
Yaris has the potential to crack this market if we learn from the mistakes – and the successes – of the past.
1
The Situation
The situation promises success in our target markets, but the failure of Generation Ytargeted subcompacts proscribes a cautious and creative assessment of the situation. We’ve
constructed the following situation analysis from a much more exhaustive PEST analysis
appended as Exhibit 1.
1. The Market
In the U.S., the Yaris competes in essentially a world marketplace of automobiles since the
U.S. car market is the most active and diverse in range of brands, models, and styles
(Exhibit 2 lists the top-selling American automobiles for 2004). Competition is extremely
intense and increasingly waged at lower and lower margins as car makers fall all over
themselves coming up with new ways to return value to the consumer. Recent losses by
American car makers have resulted in near fire-sale prices for American cars.
Brand loyalty is a critical success factor in the American market; on average, 18% - 60%
of consumers stay with the car brand they first purchased in their 20s. For this reason, most
major car makers in the U.S. are pursuing or developing aggressive marketing campaigns
targeting Generation Y which is largely viewed as the new gold strike in consumer marketing.
The American market is saturated with automobile advertising in major media venues.
There is so much advertising noise – particularly in auto marketing – and so much consumer
skepticism and obduracy in regard to advertising, that many have come to the conclusion
that its value is significantly less than its cost. Generation Y is particularly obdurate in its
response to advertising – most market research has shown that automobile advertising
directed at the Gen Y consumer is easily identified by the Gen Y viewer and summarily
rejected. In the intense competitive environment with rapidly declining value in media
advertising, the “make it new” campaign is all about searching out and creatively exploiting
alternative marketing venues.
2. The Customers
Overview
The U.S. has a large multicultural, consumerist population. Comprised of the most diverse
populations in the world, our target segments vary widely in ethnic and cultural identities.
D Population (July 1, 2005) is 295.7 million; mainly urban and suburban.
D 60 million Americans are single/never married (20%) and comprise a critical target
market for the Yaris.
D Unmarried women number 54.3 million (18% of the population) and single women
number 27.5 million (9% of the population). Women purchase from 50% to 65% of all
new vehicles, 48% of all used vehicles, and are influencers on an estimated 80% of all
U.S. vehicle purchases. Women, particularly single women, are a large and relatively
untapped market. Young single women, moving into marriage and family at later ages,
are also exploring and developing stronger identities, tastes, and lifestyles before adult
“responsibilities” set in. Even though recent market research indicates that American
women are the critical market factor determining the success of car brands in America,1
but cars are marketed almost exclusively to men.
D The U.S. is a middle-aged population: 102 million (34%) between the age of 20 and
45; 58 million (19%) between the age of 15 and 30; 60.5 million women ages 15 to 45 –
half (30 million) are unmarried.
D Young women’s income (15-35) averages $25,000 USD/year; Generation Y (16-35)
income averages $28,000 USD/year; baby boomer (40-55) averages $39,000 per year.
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D The average American is individualistic, consumerist, teleological, and has a large
number of lifestyle and identity options; self-construction extends well into middle age and
is one of the most important cultural activities and one of the most deep-seated needs of
the American consumer. This deeply meaningful and critical self-construction is largely
based on brand, commodity, and entertainment consumption.
D American consumers, particularly Gen Y, are the “entertained generation.” In
addition to self-construction based on consumption, Americans create a large part of
their identity from the entertainment they consume (for instance, calling consumed
music “my music”). The centrality of entertainment to identity formation is the key to
positioning the Yaris, or any other vehicle, to the youth market.
D Marriage ages are trending upwards: the median ages for first marriages are 25.8 for
women and 27.4 for men, up from 20.8 and 23.2 in 1970. This means Gen Y is
experiencing a historically unprecedented extended adolescence. Since adolescence largely
concerns identity formation, the Gen Y consumer is still experimenting with identity,
continuing to weigh life options, and developing stronger, more differentiated tastes,
lifestyles, and consumer habits before adult limitations, such as marriage, family, and
career, restrict identity options and lifestyle choices. What is critical for our purposes is
that young (and single female) car buyers in America approach major purchases from an
“options” and “choices” perspective rather than a “limitations” perspective.
D In large part due to the Internet, American car consumers on average do more
research prior to a new vehicle purchase than they did 10 years ago. As a result,
American consumers know what they want and overwhelmingly prefer a “no hassle”
purchase experience.
D The boomer generation – which has proven to be the strongest market for youthtargeted vehicles in the last eight years – has, unlike previous generations, not
homogenized in lifestyle and tastes, but maintained a high level of diversity,
adventurousness, and independence as individuals and as consumers.2 This fact, and the
popularity of inexpensive, youth-centered cars among boomers, indicates that the
boomer market cannot be passed over in marketing the Yaris.research and are more
knowledgable about their car purchases than in previous decades.3
D For female car buyers, the most important aspect of the purchase experience is a “no
hassle” sales experience.4
D 186 million (out of 295 million) Americans are Internet users; the Internet is
increasingly vital in the automobile buy decision.
D The young Hispanic population constitutes a significant car subculture for premium
compacts. They are a highly creative force in the repurposing of standard compacts into
much more personalized and innovative vehicles; their commodity creativity, and the
aftermarket industry it has spawned, has strongly promoted select vehicles, such as the
Honda Civic, among young buyers. Hispanics numbers 43.1 million and account for
over 50% of the population growth in the United States, so it’s important to fold the
Yaris into this car subculture – particularly since this group, more than any other, can
constantly “make it new.”
Usage patterns:
D Average driving mileage per year: 12,000.
D 196.7 million licensed drivers; 98.6 million males and 98.1 million females (2004).
D Although there’s effective parity between male and female drivers, males account for
61% of all miles driven.
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D Commuting (50 - 60%); metropolitan/suburban recreation (shopping, clubbing, gym,
social events, etc.), cargo (sports, events, activities); urban, suburban, and freeway driving.
88% of all workers drive to work; 75.7% of American workers drive to work alone.
D Americans spend over 100 hours commuting to work each year, exceeding average
yearly vacation hours (80 hours); the average daily one-way commute is 24.7 minutes.
D Americans negotiate a variety of weather conditions, from extreme cold and blizzard
conditions to hot, desert driving. The Yaris, with its small size, narrow wheelbase, and
weak drive train, is not suitable for extreme winter driving conditions (see Exhibit 3).
D American consumers invest a great deal of personal identity in their cars; in our target
segments, “personalizing” the vehicle inside or out is a critical part of the car’s use.
D Driving license age varies but is usually 16; permits are issued in some states to 14 or
15 year olds.
Customer decision-making units:
For young, first-time car buyers:
For young to middle-aged childless or one child
couples or middle-aged singles:
D Deciders: high-school and college age
youth, young adults, parents
D Deciders: male, female heads of
households
D Influencers: friends, parents, peer
groups, boyfriends, girlfriends,
D Influencers: spouse, significant other
subcultures
D Users: male or female heads of
D Users: high-school and college age
households, spouse, driving-age children
youth, young adults
D Purchasers: male, female heads of
households
D Purchasers: parents, young adults
For boomer generation buyers:
For single, independent women:
D Deciders: young women.
D Deciders: single and married men and
women; “empty-nesters”
D Influencers: parents, friends, peer
D Influencers: friends, spouse, adult-age
groups, coworkers.
children
D Users: young women, significant
others.
D Users: men, women, driving-age
children
D Purchasers: young women, parents.
D Purchasers: single and married men
and women; “empty-nesters
Needs, motivations, and preferences:
We have cataloged customer needs and preferences across several factors:
Yaris Features Functions
Low price
Lowers cost to
consumer
Surface Benefits
Lower cost;
allows for
additional
lifestyle choices
Low gas
mileage
Frees up money
for other lifestyle
options
Decreases gas
expenses
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Deeper Benefits
A sense of pride for husbanding
resources; self-satisfaction and lack
of guilt because of moderate
consumption; in the end, though,
the loss of the deeper benefit of
self-construction and lifestyle
realization more than offsets the
deeper benefit of low price
Self-satisfaction for husbanding
resources and contributing to the
environmental health of the planet;
this is an immense feel good
Unique vehicle
design in a
small size
Visually
Stand-out
differentiates
uniqueness
the vehicle from
other vehicles
Multiple
options
Allows several
vehicle
combinations
Allows
consumers to
personalize their
vehicles in
innovative ways
Entertainment
options
Allows several
combinations of
in-cabin
entertainment
Fun; more
broadly expands
entertainment in
the consumer’s
life
Special editions
Fits specific
customer tastes
and needs
Excellent
interior
detailing
Adds class and
quality to the
interior
Allows
consumers to
express other
brand or
entertainment
choices in their
car purchase
Adds aesthetic
value to the car
and the
experience of
driving the car
3. The Context
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benefit, but not strong enough to
drive a purchase in most of our
target audience
Gives the consumer a strong sense
of identity and uniqueness; the
consumer feels like they are special
and different from the crowd – this
is particularly important for our
target markets who are actively
engaged in identity formation
Gives the consumer a deep sense
of ownership; the car more
intimately reflects their own tastes
and personality and gives them
even more satisfaction in their
personal identity and uniqueness;
gives consumers a sense of control
and soothes them in their ever
present belief that they are not the
“mass” in mass marketing
Further personalizes the car by
having it more reflect consumer
entertainment choices which, in
turn, are highly constitutive of the
consumer’s identity; again, gives
the consumer a deep sense of
ownership and personal identity
Gives the consumer an
overwhelming sense of uniqueness
and further confirms them in their
individualness and identity selfconstruction
Confirms for consumers that they
are “quality” people; reaches to a
very deep need in people that they
are worth something, if not in
dollar terms, at least in human
terms – cheap interiors are a
reminder to consumers that they
aren’t worth much; excellent
interior detailing also increases the
consumer’s confidence in the
quality of the unseen of the
automobile like the drive train
The PEST analysis in Exhibit 1 summarizes the relevant context for the Yaris rollout, but
the following contextual issues stand out:
D Freeway speed limit: average urban freeway driving speed is 65 mph; average urban
arterial speeds are 35 mph. The average American drives 3-7 mph over the speed limit.
D Average gas price: 2.29 USD/gallon including taxes; in real terms, gasoline prices are
still lower than they were 30 years ago.
D Average vehicle retention: 3.5 years.
D Average car price: 21,000 USD.
D 20 million American drivers (11.6 million males, 8.4 million females) were involved
in accidents in 2004 (10% of all licensed drivers); 44,800 traffic fatalities with men at
fault for fatal accidents (40,000) more than women (14,000). However, while traffic
accidents have increased, traffic fatalities have steadily decreased over the last 30 years
largely due to mandatory and optional safety features as well as increased consumer
demand for safe vehicles. In this environment, the Yaris is at a slight disadvantage since
its small size relative to other vehicles on the road, such as SUVs, leads to the perception
that traffic accidents are more likely to be fatal for Yaris occupants.
D Traffic jams are becoming a depressing fact of life in major urban centers. The
number of workers with extreme commutes (45 minutes in one direction) numbers 13.9
million. Hapless rush-hour drivers in the 75 largest cities spend 62 hours a year stuck in
traffic, up from 16 hours in 1982. Los Angeles leads the dismal pack with rush-hour
commuters on average spending a whopping 136 hours jammed in traffic (San Francisco
trails as a distant second at 92 hours). The constant presence of traffic jams makes
improving the experience of the car’s interior critical in our Yaris rollout.
D Environmental laws are lax on emissions and mileage; the average mileage for cars
bought in the U.S. is around 28 mpg – so emissions and mileage are not critical buy
factors, but more like “feel good” factors for most consumers. However, California is a
wild card with the lowest emissions target in the country and the largest car market and
further restrictions are likely. In terms of emissions and mileage standards, California is
the lead market to design to.
D The United States imposes no tariffs on Japanese car imports, so tariffs do not enter
into pricing considerations.
D America is a multilingual culture with English predominant; American culture is
multicultural, but culture and cultural identification are highly adaptive and fluid.
Americans easily shift identities and cultural identifications.
D A Hofstede cultural analysis generally positions Americans – and our target segments
in particular – are highly individualistic, egalitarian (power distance is very narrow),
willing to take risks (or at least be perceived that way), performance and achievementoriented (and becoming more so), and, contradictorily, manifestly future-oriented (in
deep-seated identity formation) but unwilling to delay gratification.5 Americans largely
identify themselves with who they will be in the future (teleological and future-oriented), such
as “thin” or “wealthy” or “married.” This leads to a culture in which options and choices
proliferate, which then leads to frenetic sampling of choices – a gratification-now culture.
The important take-away, is that the American consumer thrives in a world of
proliferating options and choices – this satisfies both their future-oriented identity and
their need for instant gratification.
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The Customer: Critical Takeaways
First, our customer spends as much time commuting to work as they do on vacation from work and a commute
lasts as long as a television show. So the car “experience” is the strongest selling point; previous Gen Y-targeted
models have skimped on this critical factor in favor of “cheap.”
Second, self and social identity are largely constituted from commodity, brand, and entertainment consumption.
Our demographic is constructing self-identity so a consumer’s vehicle buy is a major decision as to “who they are.”
Third, the extended “adolescence” of Gen Y means that a critical amount of identity formation has occurred before
“adult” responsibilities freeze self-construction in place. We have an opportunity to intervene in this and begin a
lifetime brand consumption pattern through the Yaris as a gateway purchase.
Finally, “slow and cheap” is not what our target markets want nor is it consonant with American driving habits;
this largely explains the failure of carmakers to penetrate the Gen Y market with slow and cheap cars.
3. The Company
Strengths
1. Toyota is an experienced manufacturer of automobiles and drive trains with one of the
strongest and most trusted brand images in the industry.
2. In America, Toyota vehicles rank consistently at the top for reliability and engineering in
both reviews and brand image.
3. Toyota has a dominant market share in the U.S. car market as well as two of the topselling vehicle brands (see Exhibit 1, PEST analysis).
4. With the Yaris, the Toyota brand has a complete “life cycle” product line from youth
cars to young professional (Corolla, Camry, Lexus) to young family (Camry, RAV) to
wealthy older ages vehicles (Lexus).
5. Current dealer distribution is among the most widespread and efficient in the country
and is very dense in urban/suburban target markets; Toyota has extensive media
relations, a powerhouse mailing list, and prodigious savvy and clout negotiating the U.S.
advertising and media market.
6. Current manufacturing facilities in the United States can handle the introduction of a
new product line with vehicle variations specific to the American market.
7. Toyota enjoys enormous brand awareness in the youth market with the Scion – Gen Y
consumers are very aware of the Scion brand and rank it at the top of the cool index in
CNW’s Stodgy Index; however, the Toyota brand still remains an “old person” consumer
brand (see Exhibit 4, The Stodgy Index).
8. Toyota and Lexus have a strong reputation for building environmentally friendly cars.
Weaknesses
1. Toyota has not been successful at marketing a B subcompact cars or appealing to the
youth market under the Toyota brand; as part of the Genesis marketing project aimed to
build Toyota in the youth market, the Echo was a dismal failure, selling 46,000 vehicles
in its introductory year (1999) and falling to 26,000 in 2003 and 6,000 in 2004; the Matrix,
very similar to the Yaris and pitched to the youth market as part of Genesis, has an
average consumer age of 42.7. Despite the positive brand recognition in the Gen Y
market, Scion buyers average in the mid- to late-30s, with the exception of the Scion tC
with its youth-appealing 160hp engine and nice interior. See Exhibit 5 on how wide of
the mark youth-targeted automobiles have missed their target age groups.
2. The Toyota consumer market in the U.S. is a wee bit on the gray side; the median
consumer age is 50. Toyota has not successfully modified its “stodgy” image in the last
10 years.
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3. The current product line is, like the brand, mature and nondescript, appealing largely to a
conservative boomer market. The Yaris, as with the Scion, should appeal to trend-setters;
it, like the Scion, which, in 2003 and 2004 was a first-time Toyota purchase for 85% of
its buyers. So it can be a powerful gateway car into the Toyota product line-up.
Unfortunately, this line-up offers no equally exciting car to trade up to. Our “make it
new” campaign is intended to change that.
4. Toyota, like other car manufacturers, has not created a “woman-friendly,” or even
customer-friendly, dealership experience. Toyota car dealerships consistently rank near
the bottom in customer satisfaction. These dealerships, typical for the industry, are
overrepresented by men in ownership, management, and new car sales. If we specifically
target women with the Yaris, dealerships need to reflect this (see Exhibit 6 on women
representation in dealerships) because 39% of female car buyers prefer to deal with
female salespeople while only 10% of male buyers prefer a male salesperson6. Our
Culture 2010 program below addresses this issue.
Opportunities
1. Americans buy 5.3 million new cars per year (1 for every 50 people); 798,000 are
Japanese cars (15% of the total – up from 10% in 1998).
2. Two of the top-selling cars in America are Toyota products: the Camry (no. 1 with
426,000 new cars sold in 2004) and the Corolla (no. 3 with 333,161). Average purchase
age is late 30s (Corolla) to low 40s (Camry), giving us, for our young target market, a
large installed base of parent influencers and purchasers.
3. Car models targeted at our segments (first-time car buyers, youth) have consistently
missed their target markets (with the exception of the Scion tC) and declined in sales; the
market segment hasn’t been successfully penetrated by car makers (see Exhibit 7 for
sales figures on similarly targeted small cars). While in one light this may seem a threat, in
another it means this critical target market is still wide open.
4. Gas prices are at an all-time high, so gas economy is becoming a more critical, though
not yet dominant, factor in the buy decision.
Threats
1. Toyota faces intense major competition in the US car market; most manufacturers are
targeting the Gen Y market and some, like Honda, have been far more successful at
building that market in the long-term (it remains to be seen how successful the Scion will
be); new competitors are entering the market from China, South Korea, and even eastern
Europe (Exhibit 8, U.S. automaker advertising expenditures)
2. The U.S. car market increasingly expects significant consumer incentives. In this dog-eattail market, Toyota has most successfully managed to hold back incentives relative to
other manufacturers. Still, incentives are changing consumer behavior and expectations
(see Exhibit 9 for average manufacturer sales incentives)7 and Toyota needs to develop
product positions that obviate the need for significant incentives.
5. The Competitors
Brand loyalty is very strong in the American consumer car market, but Toyota leads all other
car makers in brand and quality perception. The top 5 automakers in the United States are
Toyota, Honda, GM, Ford, and Daimler-Chrysler.
D Toyota and Honda are pursuing largely the same market segments with the same
emphasis on vehicle quality and reliability
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D GM, Ford, and Daimler-Chrysler are pursuing largely the same market segments with
a greater share of the light truck (and in the case of Ford and GM, the heavy truck)
market.
D All major competitors are actively developing products and marketing to gain
dominant share of the Generation Y market. The importance of the Generation Y has
become the central marketing objective of Honday, GM, and Daimler-Chrysler.
D The American automakers, along with other competitors such as Volkswagen, are in
a destructive spiral of consumer value giveaways in the forms of incentives and rebates
– GM is essentially selling its vehicles at cost.
D As such, three of our top three competitors are expending vast resources in
consumer givebacks rather than perception building. Both Toyota and Honda have
devoted their resources to perception building and are maintaining market share without
considerable givebacks – although more resources are being expended. We believe that
the three major American automakers will not be able to compete on customer value
perceptions against a high-quality, heavily-marketed, inexpensive, and “fluid” product
such as the Yaris.
D Honda, like Toyota, has made significant inroads in the Generation Y market with
the Honda Civic – a vehicle that sells better in this segment and has much higher
“trendy” associations than any Toyota vehicle whatsoever – including the Scion tC
which cannot match the Civic sales numbers. As part of its concerted effort to gain and
even larger slice of the Generation Y pie, Honda is releasing the Fit in America at the
same time as we will be releasing the Yaris (April, 2006). This is a very dangerous move
for Toyota as a.) it will steal much of the thunder from our release and b.) give Honda
an near-equivalent product targeted at the exact same consumers. The bad news is this
means that Honda and Toyota advertising for their respective cars will be creating
“mind share” for the competitor’s product – consumers motivated by Yaris advertising
and messaging will be equally motivated to explore the Honda alternative because it is a
nearly identical substitute – in promoting the Yaris, we are promoting also promoting a
“Yaris-like” car, so we’re inviting consumers to consider alternatives. Since these cars
are nearly identical in size, experience, and price, our “make it new” campaign is
designed to eliminate the Fit as a substitute so that Toyota Yaris promotions produce
zero mind share for the Fit while the Fit promotions produce mind share for the Yaris
as not only a substitute, but a better one.
D There is no question that the most unconventional aspects of our product rollouts,
including the “make it new” strategy, will be imitated by our major competitors if we
create major buzz about the Yaris and capture a significant share of the Generation Y
market. Ford, GM, and Daimler-Chrysler are organizationally and economically
incapable of mounting a dynamic imitative strategy, but Honda can steal much of our
fire. The Fit and Civic platform lend themselves well to “make it new” strategies – the
Honda, for instance, gained considerable traction in the Gen Y market with the Si
rollout. Honda certainly leads in the youth “subculture” of aftermarket vehicle
enhancements which can be ported to the Fit; Toyota, as an old person’s car, lacks the
vital, dynamic, and thriving aftermarket industry and subculture.
D In America, we have an enormous advantage in our competitor’s reliance across the
board on large, multinational advertising agencies. We learned a valuable lesson from
the Scion success: capturing the Generation Y market means breaking some institutional
rules and paramount among them is firing the big agencies. Some of Scion’s most
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effective marketing has come from medium-sized, young agencies who can create edgy,
innovative, and creative ads to gain quick market share. We learned lesson from
Grolsch’s rapid gain in market share when they fired their multinational and hired a
eight-person Boston shop for their national marketing. We believe that a highly
domestic-market focused promotions campaign centrally coordinated by the Z Team
and executed by small, youthful agencies will not be readily imitated by our competitors
with their sclerotic, integrated multinational promotions vendors. No matter how they
respond to our marketing campaigns, our small, young shop and “always in play”
strategy will keep us ten steps ahead of the competition in promotion innovation.
Still, as Exhibit 10 points out, some very strong competition originates from relatively weak
brands, such as Jeep, since our target markets can be quirkily individual.
Competition for the Yaris comes from models across a variety of categories. These
categories include youth-centered vehicles, economy subcompact vehicles, boomer-targeted
vehicles, and high gas mileage vehicles. As described in The Market above, Toyota is
competing against essentially a world marketplace of vehicles in the United States across the
most dizzying and complete set of vehicle categories. The categories and models the Yaris is
directly positioned against are elucidated in Exhibit 10.
The tight competitiveness of the market means keeping a tight lid on competitor
responses to our marketing moves. With the wrong marketing moves, Toyota can fall into a
spiral of consumer value givebacks to wasteful media advertising wars. Exhibit 11 details
potential competitor responses and their consequences to standard and unconventional
marketing moves.
It’s clear from the perceptual maps in Exhibit 12 that the Yaris has a potential position
as a good experience vehicle and a self-identity or self-construction vehicle at a low price.
Our target segment has relatively simple but seemingly irreconcilable needs: they want a nice
car without breaking their budget. Because of Gen Y’s extended adolescence, their most
important, deep-seated needs are self-affirmation as a quality individual and self-construction
in their consumer and lifestyle choices in the face of a dizzying array of lifestyle options.
Company and Competitors: Critical Takeaways
Most importantly, positioning the Yaris to the female youth target market will not succeed unless dramatic and
positive moves are made to make Toyota dealerships “women-friendly.”
Second, only Toyota has cracked the Gen Y market in terms of image and positioning a B with the Scion brand;
Scion marketing contains a number of object lessons that can be ported to the Yaris rollout.
Finally, incentive marketing is likely to become a permanent feature in the U.S. market and increase in kind and
cost. It’s vital to produce brands that require little or no incentives, so the long-term viability of the brand is critical.
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The Marketing Strategy
1. The Target Segments
Our most promising segments are young men and women, single women, and boomers.
Our customers are people who prize lifestyle and personal expression over everything else.
They see themselves as lively, energetic, interesting, spontaneous, unpredictable, and willing
to be themselves even if it means not going with the crowd. These are groups that want
personality in the car rather than social validation; their car confirms them in themselves rather
than in their social or economic position. These are groups that are actively self-constructing
their identity in patterns of consumption and entertainment which they pursue more actively
than other self-construction strategies such as career, family, or social status. Our target
markets see their lives as diversely active rather than specifically active; they pursue many variant
interests often in a spontaneous fashion.
D Young, urban/suburban first-time car buyers ages 18 – 30.
D Young, urban/suburban single females ages 18 – 35.
D Young and middle aged urban/suburban childless or single child couples.
D Urban/suburban diversely active trend-setter boomers ages 40 – 55.
2. The Position
D For young people, single women, or anyone who doesn’t think like the crowd. . .
D Who want an economical, small car bursting with personality and fun . . .
D The Toyota Yaris . . .
D Is a driving experience made for your personality . . .
D Because the Yaris is more than a car . . . it’s a lifestyle.
For young people, single women, or anyone who doesn’t think like the crowd . . .
Our target segments are making a lifestyle choice and a personal statement. Our ideal
customer, whether young or boomer age, is making a vehicle purchase to confirm them in
themselves as interesting, unique, and spontaneous.
Who want an economical, small car bursting with personality and fun. . .
Because our target customers do not feel the need to show off wealth – largely because
they have little of it – they want economy, but with a big shot of personality, and above all,
entertainment.
The Toyota Yaris . . .
In order for this product to fly, it has to be suited to the American market with a more
powerful engine, stronger pickup, nicer interiors, and a raft of options that allow our
consumers to make the car their own. To make it interesting and responsive to the market,
the product will be an ever-changing set of product innovations and rollouts.
Is a driving experience made for your personality . . .
The key to the marketing success of the vehicle will be the raft of options available from
Toyota and from aftermarket partners that allow consumers to really design a driving
experience unique to them. This is unheard of in an economy car, but the low price of the
car makes all the other options possible. Our target markets want lifestyle choices, they want
the car to fit their personality, not the other way around.
Because the Yaris is more than a car . . . it’s a lifestyle.
Positioning the car as a high gas mileage car or an economy car is not going to fly with
our target segments. The economy and gas mileage of the car make other options possible that
make the car a lifestyle choice – our consumers spend money on becoming more of themselves
rather than on unnecessary things, like extra gas. So the car is a lifestyle choice and driving
the car as a personal statement and personal experience.
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4. The Unique Value Proposition
Our value proposition begins with most deep-seated need of our target segments:
The Yaris is who you are, a car customized to your lifestyle and personality.
But self-construction is important to a market with limited resources:
At a remarkably low price.
Our segments want nice, not cheap:
With the comfort, styling, and experience of a nice car.
4. New Product Development
We’ve got one rule: make it new. That means that all bets are off the table: the Yaris is an
ever-changing mark so that it can meet customer needs and continually capture press
coverage (see Exihibit 13 for the public relations coverage forecasts). Concept development
begins with the Z Teams (see Z Teams in the Appendix) and the Internet community (see
Web Site below). Development then moves to the Internet community as surveys, contests,
blog seeds, and chats flesh out development ideas in the e-sphere. The full product
specification concept (whether special edition or full product rollout) is tested in focus
groups and direct mail surveys. Test marketing or limited rollouts will result in the release of
a “Special Edition” Yaris in one to four urban markets with an extensive publicity campaign.
Market response as well as before, at purchase, and post-purchase consumer interviews will
determine the viability of a national release and any changes that need to be made to increase
the success of the eventual product rollout. An unsuccessful Special Edition Yaris will result
in the cancellation of the planned rollout, which will be substituted with another Special
Edition.
5. Globalization versus localization
We are going to pursue a complex global strategy in product, pricing, messaging, and
execution – our central goal is market responsiveness and success proliferation. We aim, as outlined
in the above discussion, to keep innovating with the model to maintain the product in a
growth stage for as long as possible; this means product innovations specific to localized
markets (features, special editions, product rollouts) and messaging nimble enough to
communicate our positioning to an ever-changing market. Marketing teams in the United
States – the Z Teams (see Z Teams in the appendix) – have total control over their product,
their message, execution, pricing, and distribution. In this sense, the U.S. Z Teams are
aggressively pursuing a multidomestic strategy. However, the centralized entrepreneurship system
(see Centralized Entrepreneurship in the appendix) is designed to manage these multidomestic
strategies and provide an internal transfer mechanism to distribute successful innovations
across borders – success proliferation. Our central aim is to “make it new,” so we are not
pursuing global standardization of any of the four Ps. Z Teams and Centralized
Entrepreneurship means that the product will become more global as product, positioning,
messaging, price, and distribution innovations developed in one market are successfully
ported across borders, but also means the product will be more domestic as innovations are
more segment-oriented for a particular country (such as the Hello Kitty Yaris in Taiwan –
see Product in the Taiwan report).
In America, the Z Team mix is going to be more radical. We intend to put the account
into play in its execution and carry the Z Team philosophy to the vendor level. Rather than
choose a multinational, big advertiser, the American team is going to use medium and small
agencies with young principals, cutting-edge work, and significant Generation Y expertise in
entertainment, gaming, and branding. The Yaris account will be consistently “in play” as
vendor contracts are limited to single product rollouts – special editions and new Yaris
products will have new advertising, Web, and nontraditional advertising contracts. This gives
12
us the highest level of creativity, immense responsiveness to the domestic market, and a
huge amount of spec work because the account will be seen in the community as in play and
open to all agencies. This vendor strategy – eschewing multinational agencies in favor of
small domestic agencies – is a blatantly domestic strategy, but the Centralized
Entrepreneurship integration assures that success is integrated and ported across borders.
The Marketing Mix
1. The Product
The Toyota Yaris is a subcompact B car with an x liter, 105 hp engine. While magnificently
suited to the urban/suburban driving patterns in Japan and Europe, the slow speed and
slower pickup make it unsuitable for the high mileage, high speed freeway and arterial
driving patterns in the U.S. Additionally, experience with economy subcompact cars as
“youth” cars in America show very limited appeal. Young consumers prize speed, handling,
and detailing. Young consumers want what other consumers want – in simple terms, a nice
car, not just cheap. Female consumers in particular prize interior detailing and comfort. For
that reason, we are repurposing the Yaris for the American market. Our eventual goal is to
create a brand position for Toyota that resonates with the youth and single woman market in
the same way the Scion brand does.
D The product will come in two models, the Yaris SA and the Yaris SX (and in two
years, a third, the Yaris SL Coupe); the Yaris SA comes with a 120 hp engine and the
Yaris SX with a 160 hp high compression engine and the Yaris SL Coupe with a 160 hp
medium compression engine.
D Consumers can choose cloth or vinyl seats; Yaris SX ships with cloth seats only.
D The Yaris SX will ship in black, electric blue, yellow, white, and red, the top colors in
the youth market; the Yaris SA will ship in the 11 colors currently in the market. The
Yaris Rave Special edition (2006) will ship in two colors, electric blue and red, and the
Yaris Rave rollout (2007) will ship in all 11 colors and include three two-color models:
electric blue and silver, yellow and silver, and brick red and silver; Yaris Sport (2006)
includes optional stripes. Yaris SL Coupe ships in 11 colors.
D Air conditioner and keyless entry are standard. Electric windows and high-end stereo
sound system will be standard on the Yaris SX and Yaris Coupe.
D The car will have a huge variety of interior options and detailing including high-end
stereo sound system, passenger side LCD display with DVD player, satellite radio,
electric windows, etc.
D Licensing deals with Apple will yield the iPod Yaris which ships with iPod dock or
in-dash iPod and high-end stereo system standard (or passenger side LCD display in the
Yaris Rave).
D The Yaris will ship with three interiors: the basic interior (corresponding to the
current interior), the SA interior (with materials and detailing closer to the Camry), and
the Sport interior (standard on SX and Yaris Sport).
Options include:
D Rear or top bike rack (Yaris Sport)
D Top kayak rack (Yaris Sport)
D Hatchback netting (Yaris SX and Yaris Sport)
D Hatchback “party” speakers and dash toggle (Yaris Rave)
D Front and top fog lights (Yaris Sport)
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In order to keep the brand vital and alive, the first four years will see regular
introductions of new Yaris models, the Yaris Rave, Yaris Sport (in both the SA and SX
configuration), and Yaris Coupe (Scion tC) as well as special edition Yaris models:
D The Yaris Rave is the entertainment Yaris which comes standard with passenger side
LCD display, DVD player, high-end stereo speakers, in-dash iPod video player dock, and
optional satellite radio, hatchback party speakers, and passenger side Xbox.
D The Yaris Sport comes with cloth seats, top/back bike rack, top/back kayak/ski rack
optional, grill fog lights, optional top fog lights and racing stripes.
D The Yaris Coupe is the Scion tC rebranded and reconfigured to the Yaris interior.
The Yaris Coupe is part of our long-term goal to translate entry sales into lifetime loyalty.
Product Rollout Timetable
Past experience has shown a significant bump in subcompact sales in the initial rollout and
an eventual decline. Our entire promotion effort is based on new product and special edition
rollouts; these rollouts are the rock on which we’ll build the “Make It New” campaign for
the Toyota Yaris (see Promotion for the rollout effects on promotions).
Date
Product
Market Extension
April, 2006:
Yaris SA, iPod Yaris
6 urban areas
August, 2006:
Yaris Rave Special Edition
12 urban areas
March, 2007:
Yaris SX
24 urban areas
June, 2007:
Yaris Sport Special Edition
4 California urban centers
August 2007:
Yaris Rave
Nationwide
April, 2008:
Yaris Sport
Nationwide
September, 2008: Yaris SL Coupe
Nationwide
April, 2009 :
Yaris SL Coupe Hybrid
Nationwide
September, 2009: Yaris SL Hybrid
Nationwide
2. The Price
The Yaris as a product is all about its options, so the base vehicle price is an ultra-low
margin car which enables the consumer to add options at higher than normal margins. Our
options packages are also “snap-on” options – most options can be purchased for the
vehicle as aftermarket add-ons at the same price including installation. Our goal is to offer a
very low base price that allows consumers to personalize their driving experience. The
following is a chart of vehicle base prices:
Yaris SA
MSRP: $9,990
Yaris SX
MSRP: $14,990
Yaris Rave SA
MSRP: $13,990
Yaris Rave SX
MSRP: $17,990
Yaris Sport SA
MSRP: $12,990
Yaris Sport SX
MSRP: $16,990
Yaris Special Edition MSRP: TBD
Yaris SL Coupe
MSRP: $17,990
Exhibit 10 outlines direct competition in relevant categories and their price points.
Pricing, however, is part of the Make It New marketing strategy. Our goal is to create
perceived customer value in the options that turn the vehicle into a lifestyle choice; since
these options create immensely more perceived value, they carry a much higher premium.
Finally, the product rollout schedule reveals another central strategy: we’re gradually upping
the ante on the Yaris. The initial Yaris SA positions the vehicle as an ultra-value with low
price and very high quality. Later Yaris rollouts introduce premium vehicles up until the
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Yaris SL Coupe, a distinctly premium compact car. The Yaris line, then, is less about price
positioning then it is about lifestyle. This allows us to market the low-end Yaris with limited
options to first-time buyers, graduate them to a premium Yaris, and graduate them from
there to another Toyota model. So the completed product line, as can be seen in Exhibit 10,
occupies several pricing positions within each category and, most significantly, pricing
positions below similar cars, i.e., hybrids. And, if the Yaris does its job, in three years Camrys
and Corollas will be incorporating many of the same features that make the Yaris so cool!
3. The Distribution
The vehicle will be distributed nationwide at Toyota dealerships but concentrated in clement
weather states – the vehicle will be available to dealers in extreme winter states, but
marketing dollars will not be expended – see Exhibit 3 for extreme winter states.
There are 1212 Toyota dealerships in the United States (854 are licensed to sell Scion).8
Here’s the reality: the Yaris will not succeed unless the Toyota dealership culture changes
substantially. The car is being marketed to first-time buyers, young buyers, and women, all of
whom prefer a customer-friendly, helpful, and no-hassles purchase experience which Saturn
dealers have mastered to their profit. However, the current dealer culture is male-dominated,
pushy, hard-sell, and with goals openly incongruent with buyer goals and so produces a
consistently unpleasant buying experience for our target markets. In fact, Toyota ranks near
the bottom in customer satisfaction of the buy experience, particularly among women.
In order to succeed with the Yaris (and greatly expand the consumer base for other
Toyota vehicles), we are instituting the Culture 2010 program to create a dealership culture
that provides a customer-friendly, goal congruent purchase experience. The Culture 2010
program is described in Exhibit 14.
2. The Promotion
Our product rollout schedule is the hook on which we’re going to hang an energetic,
nontraditional promotion campaign that borrows the best from the Scion marketing
innovations with radically new elements to capture a larger market (see Z Teams in the
Appendix):
Traditional media advertising: the traditional media advertising campaign will include heavy
print, television, and outdoor advertising three months in anticipation of the April, 2005
rollout. Advertising will trail off between product rollouts and return to prelaunch and
launch levels at each product rollout. In print advertising, our goal is to take the medium to
new places (as BMW did with the Mini Cooper empty milk carton insert) with inserts.
Public relations: The purpose of staggered product rollouts it to make the Yaris seem the
center of enormous energy and creativity; its secondary purpose is to gain unprecedented
coverage in the media as each rollout spikes press coverage to initial launch levels (see
Exhibit 12 for public relations coverage projections). Our public relations strategy will be
unique in its aggressive pursuit of online publicity – Webzine article writers, bloggers, and
expert sites to maximize the Yaris profile on the Web. This huge and uncontrollable PR
resource is central to the buying process of our target markets – most young buyers and
boomers do the bulk of their purchase research on the Web and trust anonymous Web
sources far more than advertising and branded collateral.
Web sites: In targeting Gen Y customers, our Web site and back-end database is the firm
foundation of our marketing. We will develop two different Web sites, one targeted to the
hip-hop culture (young males) and the other targeted to single women. Each site will be an
environment rather than a car-marketing site and the main focus will be on entertainment –
since we are positioning the vehicle as, in part, an extension of the buyer’s entertainment
consumption. The Web site will include a Project Greenlight-type short film contest in which
15
Toyota chooses short-film projects submitted by users and provides financing; completed
projects are featured on the site. The site will also include free music downloads in mp3 and
iPod format (to go with the Apple licensed iPod dock) timed to Yaris concert promotions
(see Events below). In addition, product rollouts will be preceded on the Web site by
“feature” contests in which users specify features to be included in the new product rollout.
“Feature” winners will receive a free vehicle and have their feature included in the product
(this provides a valuable source of consumer preference information). Eventually, the Yaris
line-up will be positioned as “user-designed.” All site events and surveys will be tied to a
CRM back-end database. In addition, we’ll use the full panoply of guerilla Web site
techniques including artificial Yaris fan sites, seeded blogs, hip-hop Yaris sites, viral plants
(see Viral Marketing below), and seeded chat/discussion groups. Since our marketing strategy
depends on constantly “making the product new,” each product rollout will be preceded by
a substantial uptick in guerilla site activity.
Events: The most salient lesson learned from Scion marketing is the close tie-in with hiphop culture and events. The Yaris will be a featured promoter of select hip-hop and female
contemporary music events. Event promotions and tie-ins are meant to solidify the Yaris as
an entertainment vehicle with its iPod dock, party speakers, and other entertainment features.
Magazine: The hip-hop magazine especially created for the Scion will do double duty in
promoting the Yaris as well. In addition, we’ll be publishing a quarterly female entertainment
magazine – currently no general entertainment magazine targets the single female audience –
as an attempt to carry into the young female market the success that the Scion hip-hop
magazine has had with the young male market.
Product placement: Our product placement agents are on the look-out for Garden State type
projects. We’re not looking for blockbusters, like Spiderman 3, but the successful Gen-Y
targeted films that create a deep, emotional attachment in the audience. Road films, like
Garden State, represent a great opportunity to feature the vehicle throughout the film. Our
central television target are Gen Y-targeted reality shows.
Sponsored entertainment: Toyota has been slow off the mark in producing sponsored
television shows; our goal is to team with a production company and produce “event”
entertainment shows, such as a cable concert series timed to new and special edition product
rollouts.
Parking the car: Another valuable lesson learned from the Scion promotion is to simply
park the vehicle – that’s right, park the car – at fun venues frequented by our target segments,
i.e. outside clubs, sporting events, and concerts. For instance, the Yaris Rave, with its
hatchback speakers, is an ideal candidate for concert or sporting event tailgating.
Viral marketing: Again, in Project Greenlight fashion, Toyota will sponsor rollout contests for
spec commercials and shorts in film schools and groups around the country. The purpose is
to produce edgy, energetic, creative film shorts for the Yaris that will be virally distributed.
All winning films will win a prize and be planted on guerilla Web sites for viral distribution.
The purpose is less about distribution than creating an image of edginess, creativity, and
energy around the product.
Direct mail: A direct mail campaign targeted at Gen Y consumers will generate low
response; one directed at 35+ consumers will generate boomer interest in the vehicle as well
as parent interest. Each product rollout will include a direct mail campaign directed at age
35+ consumers. Gen Y consumers will receive opt-in entertainment newsletters from the
Yaris site and guerilla sites masquerading as entertainment or fan sites.
Dealer incentives and promotional materials: Outside of normal dealer incentives and Culture
2010 incentives (see Distribution below), no additional incentives are planned. Every dealer
16
will be provided with a 30-minute advocacy script video, a local press kit, Toyota branded
collateral, unique Yaris collateral, Yaris posters, and vehicle tent tags. Each product rollout
will include a Yaris-branded CD shipped to dealers for free distribution to customers. These
CDs will include three to four tracks from Toyota-sponsored/licensed hip-hop or female
artists.
Z-Team collateral items: The American creative strategy centers around marketing Z-Teams
(see Z Teams in the appendix). Part of the Z-Team strategy is to produce innovative collateral
items around the brand, the messaging, or sponsored groups. This collateral, branded Get
StuFF on the Web sites and advertising, include t-shirts, posters, sweats, baseball caps, and
so on, with highly innovative, edgy, and creative graphics and ideas. The messaging, “Get A
Life.” is particularly fertile ground for edgy, interesting graphics and apparel.
5. The Message
The basic positioning will be realized in the messaging campaign:
Get a life!
This message resonates with our positioning in the following way:
D It positions the vehicle as a lifestyle choice rather than an “economy” or high gas mileage
car; it also positions the vehicle as “fun” and slightly rebellious.
D It appeals to our target segments who are largely preoccupied with self-construction.
D It allows for certain rebellious or nonconformist advertisements that show users making
lifestyle choices over “expected” choices or responsibilities, that is, choosing to be who they
are rather than who they should.
D It effectively conveys that the vehicle is about options and lifestyle choices.
D The phrase, like “Just do it!,” lends itself to infinite interpretation. It is positive (but with
an edgy aspect) and affirming.
D It’s a young person’s phrase, but it resonates deeply with all age groups. Anyone who
defines themselves by in terms of self-construction, rather than limitations and
responsibilities, will identify strongly with the message and understand intuitively and deeply.
D Above all else, the phrase is a great platform for Yaris stuff – t-shirts, other apparel,
posters, alternative venue signage, and so on.
17
Exhibit 1: USA PEST Analysis
1. Political and regulatory environment
Government Type
Constitution-based federal republic; strong democratic tradition with representative democracy
at the federal and state level. Executive, bicameral legislative, and judicial branches in both
federal and state governments based on a checks and balances sytem.
Political Parties
At both the national and state level, politics are dominated by two parties, Republican and
Democrat
Regulation and statute law
Laws and regulations are written at the national level and regulate behavior and commerce
nationwide under the limitations of the commerce cause of the Constitution. Most laws and
regulations governing commerce and behavior are written at the state level; this includes mileage,
safety, and emissions regulations. Almost all driving regulations are set at the state level. Certain
states also write laws and regulations in public referenda; these referenda frequently involve
driving and/or safety/emissions standards. All told, emissions and mileage standards are
relatively weak in the U.S.; safety standards are more strict.
Taxes and tariffs
American consumers are taxed at the state level on automobile purchases. Both the state and
federal governments tax gasoline. Tariffs are not charge on Japanese automobile imports.
Licensing
Driving licenses and permits are issued by individual states and the lowest age varies.
Average licensing age: 16
Average permit age: 15
Average Speed Limit
Rural freeway: 70; range: 65-75
Urban freeway: 60; range 55-75
2. Economic and financial environment
Economy
The US has the largest and most technologically powerful economy in the world, with a per
capita GDP of $40,100. In this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments buy needed goods and
services predominantly in the private marketplace. US business firms enjoy considerably greater
flexibility than their counterparts in Western Europe and Japan in decisions to expand capital
plant, to lay off surplus workers, and to develop new products. At the same time, they face
higher barriers to entry in their rivals' home markets than the barriers to entry of foreign firms in
US markets. US firms are at or near the forefront in technological advances, especially in
computers and in medical, aerospace, and military equipment; their advantage has narrowed
since the end of World War II. The onrush of technology largely explains the gradual
development of a "two-tier labor market" in which those at the bottom lack the education and
the professional/technical skills of those at the top and, more and more, fail to get comparable
pay raises, health insurance coverage, and other benefits. Since 1975, practically all the gains in
household income have gone to the top 20% of households. The response to the terrorist
attacks of 11 September 2001 showed the remarkable resilience of the economy. The war in
March/April 2003 between a US-led coalition and Iraq, and the subsequent occupation of Iraq,
required major shifts in national resources to the military. The rise in GDP in 2004 was
18
undergirded by substantial gains in labor productivity. The economy suffered from a sharp
increase in energy prices in the second half of 2004. Long-term problems include inadequate
investment in economic infrastructure, rapidly rising medical and pension costs of an aging
population, sizable trade and budget deficits, and stagnation of family income in the lower
economic groups. The economic system ranks near the top (but not at the top) in the world
corruption index and near the top (but not at the top) in the economic freedom index.
Substantial protections of private property and investments key to economic freedom ranking.
GDP (PPP)
$11.75 trillion (2004 est.)
Per Capita GDP (PPP)
$40,100 (2004 est.)
GDP Real Growth Rate
4.4% (2004 est.)
Income
Median household income: $44,389
Average income for high school graduate only: $27,915
Average income for a four year college graduate: $51,206
Unemployment (June, 2005)
Total: 4.9%
16-19: 19.1% (June, 2005)
Men 20+: 4.1%
Women 20+: 4.8%
Inflation Rate
2.5% (2004 est.)
Industries
Leading industrial power in the world, highly diversified and technologically advanced;
petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food
processing, consumer goods, lumber, mining.
Cars
New cars sold in the U.S. in 2004
5,356,873 total
2,149,059 imports
789,222 Japanese imports (does not include Japanese cars made in U.S.)
Top-selling U.S. passenger cars 2004
Toyota Camry 426,990 (413,296, 434,145, 390,449 [2])
Honda Accord 386,770 (397,750, 398,980, 414,718 [1])
Toyota Corolla/Matrix 333,161 (325,777, 254,360 [5] 245,023 [6])
Honda Civic 309,196 (299,672 [5] 313,159 [4] 331,780[4])
Chevrolet Impala 290,259 (267,882 [6])
Chevrolet Malibu 266,017 (173,263 [10])
Ford Taurus 248,148 (300,496 [4])
Nissan Altima 235,889 (201,240 [9])
Ford Focus 208,339 (229,353 [8] 243,199 [6] 264,414 [5])
Chevrolet Cavalier 195,275
Dodge Neon 113,476
3. Social and Cultural Environment
Population
Total population
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295,734,134 million (July 1, 2005)
Foreign born population
34.2 million (12%)
17.9 million born in Latin America; 9.2 million born in Asia
Second generation Americans
30.4 million (11%)
Population of states without severe winter conditions
(Alabama, Arizona, Arkansas, California, DC, Florida, Georgia, Hawaii, Kansas, Kentucky, Louisiana, Maryland, Mississippi, Missouri, Nevada,
New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington,
West Virginia)
203.7 million
Households
Married couples
50.2 % of households are married households
22.1% of households are married with one or more children under 18
Female head-of-households with no husband present and children under 18: 5.3% of
households
12% of households are unmarried cohabitation households
5.6 million stay-at-home mothers
147,000 stay-at-home fathers
Ethnicity
White 81.7%, black 12.9%, Asian 4.2%, Amerindian and Alaska native 1%, native Hawaiian and
other Pacific islander 0.2% (July, 2003). Hispanics are counted in the U.S. census as White.
Median Age
Total: 36.27 years
Male: 34.94 years
Female: 37.6 years
Education
High school education: 84%
Bachelor’s degree or higher: 27%
Commuting patterns
Average American commute: 24.7 minutes
Metropolitan commutes:
New York: 38.4 minutes
Chicago: 35 minutes
Philadelphia: 33.7 minutes
Newark: 32.3 minutes
Los Angeles: 30 minutes
Extreme commutes (percentage of commuters who commute 90 minutes or more per day):
New York: 5.6%
Baltimore: 5.6%
Newark: 5.2%
Riverside, CA: 5.0%
Los Angeles: 3.0%
Philadelphia: 2.9%
Chicago: 2.5%
Stuck in Traffic (hours per year)
Los Angeles: 136
San Francisco: 92
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Licensed Drivers in the U.S.
All
Total: 196,166
16-18: 6,207,000
19-22: 12,873,000
20-24: 16,737,000
25-29: 17,064,000
30-34: 18,925,000
35-39: 19,684
Female
Total: 97,937
16-18: 3,028,000
19-22: 6,314,000
20-24: 8,243,000
25-29: 8,394,000
30-34: 18,925,000
35-39: 9,724,000
60 million Americans are single/never married (20%) and comprise a critical target market
for the Yaris.
Unmarried women number 54.3 million (18% of the population) and single women number
27.5 million (9% of the population). Women purchase from 50% to 65% of all new vehicles,
48% of all used vehicles, and are influencers on an estimated 80% of all U.S. vehicle
purchases.
The U.S. is a middle-aged population: 102 million (34%) between the age of 20 and 45; 58
million (19%) between the age of 15 and 30; 60.5 million women ages 15 to 45 – half (30
million) are unmarried.
The average American is individualistic, consumerist, teleological, and has a large number of
lifestyle and identity options; self-construction extends well into middle age and is one of the
most important cultural activities and one of the most deep-seated needs of the American
consumer. This deeply meaningful and critical self-construction is largely based on brand,
commodity, and entertainment consumption.
American consumers, particularly Gen Y, are the “entertained generation.” In addition to
self-construction based on consumption, Americans create a large part of their identity from
the entertainment they consume (for instance, calling consumed music “my music”).
Marriage ages are trending upwards: the median ages for first marriages are 25.8 for women
and 27.4 for men, up from 20.8 and 23.2 in 1970. This means Gen Y is experiencing a
historically unprecedented extended adolescence. Since adolescence largely concerns identity
formation, the Gen Y consumer is still experimenting with identity, continuing to weigh life
options, and developing stronger, more differentiated tastes, lifestyles, and consumer habits
before adult limitations, such as marriage, family, and career, restrict identity options and
lifestyle choices.
The boomer generation has, unlike previous generations, not homogenized in lifestyle and tastes,
but maintained a high level of diversity, adventurousness, and independence as individuals and
as consumers.
4. Technological and geographic environment
Area
21
Total: 9,631,418 sq km
Land: 9,161,923 sq km
Water: 469,495 sq km
Climate
Mostly temperate, but tropical in Hawaii and Florida, arctic in Alaska, semiarid in the great plains
west of the Mississippi River, and arid in the Great Basin of the southwest; low winter
temperatures in the northwest are ameliorated occasionally in January and February by warm
chinook winds from the eastern slopes of the Rocky Mountains. Extreme winter weather
conditions (high snowfalls and low temperatures) in the northeast, Midwest, and northern Rocky
states).
Highways
Total: 6,393,603 km
Paved: 4,180,053 km (including 74,406 km of expressways)
Unpaved: 2,213,550 km (2003)
Internet Hosts
115,311,958 (2002)
Internet Users
186 million (2004) – 19% of world users
Entertainment technology
Americans are at the forefront of entertainment technology consumption; in large part, this is
because Americans derive much of their individual and cultural identity from the entertainment
they consume. Entertainment consumption runs the gamut from movie theatre attendance,
Internet, stereo, CDs, DVDs, cable television, satellite radio, portable music storage.
22
Exhibit 2: Top-Selling Passenger Cars and Trucks in U.S. 2004
Toyota Camry
Honda Accord
Toyota Corolla
Honda Civic
Chevrolet Impala
Chevrolet Malibu
Ford Taurus
Nissan Altima
Ford Focus
Chevrolet Cavalier
426,990
386,770
333,161
309,196
290,259
268,017
248,148
235,889
208,339
195,275
Pontiac Grand Am
Pontiac Grand Prix
Ford Mustang
Buick LeSabre
Dodge Neon
Hyundai Elantra
Chrysler 300 Series
Hyundai Sonata
133,707
131,551
129,858
114,157
113,476
112,892
107,820
107,189
Exhibit 3: Extreme Winter Driving Conditions
The Yaris with its subcompact size, weak engine (currently 105 hp), narrow wheelbase, and small
wheels is unsuitable for extreme winter driving conditions. While the vehicle will be available in
states with extreme winter conditions, marketing resources will be very limited. Below is a list of
states with extreme winter conditions and high snowfalls making for perilous winter driving
conditions (rural New York and Pennsylvania would be on the list as extreme winter states, but
the largest markets in these states are in Philadelphia and New York City).
State
Alaska
Colorado
Connecticut
Idaho
Illinois
Indiana
Iowa
Kansas
Maine
Michigan
Normal low
9
15
17
24
14
19
12
19
0
16
Extreme low
-34
-19
-26
-24
-27
-27
-26
-21
-41
-22
State
Normal low
Minnesota
4
Montana
10
Nebraska
12
New Hampshire
10
North Dakota
-1
South Dakota
11
Utah
21
Vermont
9
Wisconsin
13
Wyoming
9
23
Extreme low
-39
-42
-23
-37
-44
-31
-30
-30
-26
-37
Exhibit 4: The Stodgy Index
Each year, CNW Market Research publishes The Stodgy Index in which 16 to 24 year olds are
asked to rank cars in order of preference. “Trendy” cars are the ones the respondents aspire the
most to; “Stodgy” cars are the ones they aspire the least to.
Source: The Stodgy Index 2004 (CNW Market Research)
24
Exhibit 5: Car Target Age Groups
The graph below shows automobiles where the marketing target median age did not turn out to
be the actual consumer median age. In almost every case, the cars were intended for the youth
market but captured a significant boomer audience. Source: The Stodgy Index 2004 (CNW Market
Research)
Source: The Stodgy Index 2004 (CNW Market Research)
25
Exhibit 6: Female Workforce in American Dealerships
Total dealership workforce 7%
Office staff 60%
Finance/insurance and managers 16.2%
General Managers 7.1%
Owners 4.9%
New car sales 4.2%
Service advisers 2.2%
Use-car sales 2.1%
Source: CNW Market Research
Exhibit 7: Sales of Gen Y-Targeted Models
Ford Focus
Dodge Neon
Toyota Echo
1997 1998 1999 2000 2001 2002 2003 2004
26
Exhibit 8: U.S. Automaker Advertising Expenditures
In millions of dollars
GM: $3,997.4
DaimlerChrysler: $2,462
Ford: $2,458
Toyota: $1,821
Nissan: $1,539.9
Honda: $1,204.9
Volkswagen: $580.1
Hyundai: $533.6
Mazda: $412.9
Mitsubishi: $374
Source: “100 Leading National Advertisers 2005,” Advertising Age
Exhibit 9: U.S. Car Maker 2004 Average Incentives per Vehicle
GM: $4,973
Ford: $4,861
DaimlerChrysler: $4,738
Nissan: $2,044
Honda: $783
Toyota: $747
Source: CNW Market Research
However, Toyota sales incentives averaged $1,090 in March, 2005, 46% higher than CNW’s last
numbers. Source: Chris Woodward, “Toyota Boosts Sales Incentives to All-Time High,” USA
Today April 25, 2005.
27
Exhibit 10: Yaris Competition in Models, Categories, and Market
Segment Categories
Subcompacts economy “B” vehicles
D Yaris SA
$9,990
D Chevrolet Aveo
$9,999
D Hyundai Accent
$9,999
D Toyota Echo
$10,455
D iPod Yaris
$10,990
D Saturn Ion
$11,430
D Scion xA (Toyota)
$12,530
D Mazda 3
$13,710
D Yaris SX
$14,990
Metropolitan/suburban youth culture vehicles
D iPod Yaris
$10,990
D Honda Civic
$13,260
D Yaris SX
$14,990
D Scion tC (Toyota)
$15,152
D BMW Mini Cooper $16,950
D Yaris SA Hybrid
$16,990
D Pontiac Vibe
$16,990
D Volkswagen New Beetle $16,570
D Jeep Wrangler
$18,730
Ethnic youth culture vehicles
D Honda Civic
$13,260
D Yaris Sport
$12,990
D Yaris Rave
$13,990
D Yaris SX
$14,990
D Honda Civic Si
$19,320
D Mitsubishi Eclipse
$20,294
D Mazda RX-8
$25,935
High gas mileage vehicles
D Chevrolet Aveo
$9,999
D Hyundai Accent
$9,999
D Yaris SA
$9,999
D Ford Focus
$14,010
D Scion xA (Toyota)
$12,530
D Toyota Echo (disc)
$10,455
D Toyota Matrix
$15,400
D Yaris SA Hybrid
$16,990
D Honda Insight
$19,845
D Yaris Coupe Hybrid
$19,990
D Toyota Prius
$21,725
Boomer “youth” vehicles
D Yaris SA
$9,990
D Hyundai Accent
$9,999
D Scion xA
$12,530
D Yaris Sport
$12,990
D Scion xB
$13,880
D Yaris Rave
$13,990
D Dodge Neon (disc)
$14,395
D Yaris SX
$14,990
D Volkswagen New Beetle $16,570
D BMW Mini Cooper $16,950
D Honda Element
$17,965
D Yaris SL Coupe
$17,990
D Jeep Wrangler
$18,730
D Chrysler PT Cruiser $18,990
D Honda Civic Si
$19,320
D Yaris Coupe Hybrid
$19,990
D Subaru Baja
$22,490
D Mazda Miata
$23,990
28
Exhibit 11: Competitor Response Table
Promotion
Initial Yaris rollout
Competitor Response
Comparable vehicle
rollout
Low price
Immediate price
competition
Sales incentives and
rebates
Immediate parity
matching sales
incentives and rebates
equivalent to a price
war
Media advertising
Countervailing media
advertising campaign
Entertainment
production, event
sponsorship
Countervailing
entertainment and
event sponsorship
Web site innovations;
entertainment viral
marketing
Me-too catch-up Web
promotions on limited
models
29
Consequence
This is a done deal; the
Yaris rollout has
provoked automakers
with similar
subcompacts to launch
them in our target
markets for our target
segments; the
consequence will be a
hard-fought battle for
recognition and market
share; product failures
by our competition may
result in alternative
product rollouts
Possible price war that
destroys all profits.
Toyota, with its high
margins on other
vehicles, is in a
strategic position to win
a price war.
Possible incentives war
that erodes Toyota’s
strong position vis-à-vis
incentives for its other
vehicles. Our
competitive goal is to
avoid sales incentives
Would degenerate into
an advertising war of
competing messages
targeting Generation Y
consumers with no real
winners.
The Scion experience
has shown that our
competitors are slow
off the mark in
innovative, audiencecapturing
entertainment
production (broadcast
concerts, reality TV
shows) and event
sponsorship for our
target markets
Competitor moves
could be too little and
too late; the Web
community is
Guerilla Web site
marketing, blog
seeding, online media
management
Dealership culture
changes
Me-too catch-up
Innovative new product
rollouts
Me-too product
innovations and special
editions
Limited catch-up
30
notoriously fickle and
frowns upon “me-too”
content
Competitor response
likely to be tepid and in
response to marketing
plan revelations
Toyota will have a firstmover advantage in
being the first major
dealer to overhaul
dealership culture;
competitor response
likely after a significant
(2-3 year) time lag
Too little too late; Yaris
will have gained the
first mover status and,
with the introduction of
the Yaris SL Coupe,
will have a complete
product “bridge” at
about the same time
competitors will be
responding to initial
product innovations
Exhibit 12: Perceptual Maps
Price and self-worth
High self-worth
instantiation
Eclipse RX-8
Mini Cooper
PT Baja
Civic Si
tC
Element
Prius
Beetle
High
Price
Civic
Low
Price
xB
Ion
Aveo
Echo
Accent
Matrix
Focus
Insight
Low self-worth
instantiation
Economy and fun
RX-8
High fun
Baja
Mini Cooper
Eclipse
Civic Si
Low
Economy
PT
Element
tC
Beetle
High
Economy
xB
Civic
Prius
Matrix
Ion Aveo
Focus Echo
Accent Insight
Low Fun
Our target segments have a deep-seated need to feel that they have worth and value, a critical success
component in identity self-fashioning. But they do not have many objective measures of self-worth, so they look
to consumption patterns to instantiate or objectify their worth since worth, as distinct from“self-esteem” which
is individual and interioristic ,is semiotic and transactional. Our target segments also want to have fun and,
more deeply, perceive themselves as “fun.” So the “fun” scale measures both lifestyle fun and the need to selfidentify as fun. Yet our target markets deal with limited budgets, so these needs must be met within budget
constraints Note the white spaces in the perceptual maps: there’s room for a low price and economical car that
has a high fun factor and confirms deep-seated needs for objective self-worth and a fun self-identity.
31
Uniqueness and availability
High uniqueness
instantiation
Baja
RX-8
Mini Cooper
Eclipse
Civic Si
Beetle
Low
Availability
PT
Element
xB
Prius
Insight
High
Availability
tC
Matrix
Ion Focus
Accent Civic
Aveo
Low uniqueness
instantiation
Uniqueness and price
High uniqueness
instantiation
Mini Cooper
Low Price
xB
tC
Civic Si
PTElement
Beetle
Matrix
Ion Civic
Aveo
Insight
Accent
Focus
Low uniqueness
instantiation
Baja
RX-8
Eclipse
High Price
Prius
Our target segments are deeply preoccupied with their individual uniqueness and, in the absence of objective
measures of uniqueness, such as achievements, turn to consumption patterns for objective, in the literal sense of
the word, confirmation of their uniqueness. It is a truth universally acknowledged that no consumer believes
themselves to be the “mass” in mass marketing. There are two concerns to uniqueness: availability and price.
Cars that objectively semiotically instantiate a consumer’s uniqueness – that make them feel they are making
a positive statement about how they stand out from the crowd– tend to be expensive and unavailable. So Baja
32
drivers stand out no matter where they are since the car is in form one of a kind, hard to find, and relatively
expensive. Focus drivers get no reinforcement of their uniqueness from driving their vehicle. Note in the
perceptual maps above, there is ample white space available for a car that is both widely available and
inexpensive but confirms the user in their uniqueness. This tells us that the Yaris needs more than “cute”; it
needs a high level of personalization and special editions to make it a standout.
33
Exhibit 13: Public relations projections
Impressions
2500
2000
1000
Jan
April
June Aug
2006
Jan
April
June
2007
34
Aug
Jan
April June
2008
Aug
Exhibit 14: Culture 2010 Dealership Program
The purpose of the Culture 2010 Dealership Program is to transform dealership culture to
be congruent with today’s consumers and first-time car buyers who are majority female,
highly informed about their car purchase, educated in dealer sell techniques, and incentive
expectant. The aim is to produce an excellent purchase experience whose value outweighs
incentives expectations and produces goal congruence between the consumer, the dealer,
and Toyota. The Culture 2010 program will produce the following changes:
D The purchase experience will not be hard-sell, pushy, or bait-and-switch, but
customer-friendly, no hassle, and deeply respectful of consumer choices.
D Consumers will deal with one salesperson through the entire experience.
D Women will constitute a greater percentage of the sales and management force.
D The “no-hassle” promise will mean that consumer’s needs are met and questions are
answered – consumers will be informed at the beginning that if they know what they
want and how they want to pay for it, they will be handled to a senior salesperson for a
no-haggle experience.
In order to change dealer culture, the Culture 2010 program will include:
D A balanced scorecard incentive system that tracks customer experience as the critical
success factor. Financial targets, such as volume, will not be part of the balanced
scorecard performance evaluation until 2010. Volume incentives will be extended to
dealerships that adopt and meet balanced scorecard targets no matter what the volume
of vehicles sold.
D Volume incentives will be automatically extended to dealers who meet women
salesperson/manager targets each year no matter what the volume sold – double the
number of new car saleswomen by end of 2006 and 35% representation in new car sales
and management by 2010.
D Volume incentives will also be automatically extended to dealers who institute a
balanced scorecard evaluation system set up by Toyota and meet balanced scorecard
targets – no matter what volume of cars are sold.
D Volume and dealer incentive triggers will increase year-by-year for dealers who do
not meet these targets or institute balanced scorecard evaluation procedures to be totally
phased out for noncompliant dealers by 2010.
D Mandatory Culture 2010 training for managers and salespersons using companysponsored trainers and materials.
D Mandatory Culture 2010 collateral and point-of-purchase displays and posters.
D An aggressive public relations campaign in both traditional media and Web media to
produce consumer “pull” for the program at dealerships. Consumers that expect Culture
2010 purchase experiences will be part of the discipline for noncompliant dealers. The
Culture 2010 public relations campaign will substantially help Yaris sales.
35
Endnotes
Women Make Winners or Losers of Brands in 04¸CNW Market Research Document 947 (January, 2005)
Potter, Donald L., The 50+ Boomer (Sherman Oaks, CA: Gabriel Publications, 2002)
1 Automobile Purchase Process – US – September 2005 Mintel Reports, 2004; American Car Buyers Research Online, J.D.
Power & Associates, 2002
1 Blumberg, George P. “To Sell a Car That Women Love, It Helps if Women Sell It,” New York Times, October
26, 2005.
1 This is the problem with Hofstede’s model in that is based on oversimplified and unconstitutive polarities (see
Of Grammatology for a deconstruction of polar categories). Simply put, polarities don’t work. They are
misunderstandings – for instance, future orientation, a teleological world view, is fully consonant with the
inability to delay gratification; these two are not polar opposites, a teleological, future-oriented world view and
behavior pattern is, in fact, the sine qua non of an instant gratification culture.
1 Blumberg, George P. “To Sell a Car That Women Love, It Helps if Women Sell It,” New York Times, October
26, 2005. Athough women only own 7% of dealerships, those dealerships consistently rank near the top;
research suggests it’s because these dealers treat women well when they come into the showroom. Le Beau,
Christine, “As Car Dealers, Women are Scarce but Successful,” New York Times, January 12, 2003
1 Plungis, Jeff, “Automakers Now Discount 90% of Vehicles, See a Paltry 0.8% Sales Rise,” The Detroit News,
Dec. 8, 2004
1 About Toyota: North American Affiliates (http://www.toyota.com/about/operations/na-affiliates)
1
1
36
Women Make Winners or Losers of Brands in 04¸CNW Market Research Document 947 (January, 2005)
Potter, Donald L., The 50+ Boomer (Sherman Oaks, CA: Gabriel Publications, 2002)
3 Automobile Purchase Process – US – September 2005 Mintel Reports, 2004; American Car Buyers Research Online, J.D.
Power & Associates, 2002
4 Blumberg, George P. “To Sell a Car That Women Love, It Helps if Women Sell It,” New York Times, October
26, 2005.
5 This is the problem with Hofstede’s model in that is based on oversimplified and unconstitutive polarities (see
Of Grammatology for a deconstruction of polar categories). Simply put, polarities don’t work. They are
misunderstandings – for instance, future orientation, a teleological world view, is fully consonant with the
inability to delay gratification; these two are not polar opposites, a teleological, future-oriented world view and
behavior pattern is, in fact, the sine qua non of an instant gratification culture.
6 Blumberg, George P. “To Sell a Car That Women Love, It Helps if Women Sell It,” New York Times, October
26, 2005. Athough women only own 7% of dealerships, those dealerships consistently rank near the top;
research suggests it’s because these dealers treat women well when they come into the showroom. Le Beau,
Christine, “As Car Dealers, Women are Scarce but Successful,” New York Times, January 12, 2003
7 Plungis, Jeff, “Automakers Now Discount 90% of Vehicles, See a Paltry 0.8% Sales Rise,” The Detroit News,
Dec. 8, 2004
8 About Toyota: North American Affiliates (http://www.toyota.com/about/operations/na-affiliates)
1
2
37