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Marketing Plan: Toyota Prius
Rebecca Rogoschewsky
Johns Hopkins University
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MARKETING PLAN FOR TOYOTA PRIUS IN NORTH AMERICA 1
Section 1: Current Marketing Situation
Toyota is a Japanese automaker known for efficient and reliable vehicles. Most car
manufacturers were impacted by a declining economy throughout the last decade; however,
Toyota fared better than many of its competitors. The company was impacted by natural
disasters throughout 2011 that caused serious disruptions in the supply chain and limited access
to numerous parts (Kageyama, 2013), and throughout a number of years before that, struggled
with scrutiny over millions of vehicle recalls in the United States, due to issues such as defective
floor mats, gas pedals, and brakes. While these events no doubt impacted Toyota s reputation,
the Japanese automaker sold 9.748 million vehicles and was the best-selling automaker in 2012(Kageyama, 2013). The company is planning to use the reputation it built for green technology
with the Prius to help rebuild its brand (Kageyama, 2012).
The Toyota Prius, launched in 1997, was one of the first hybrid vehicles to be offered to
consumers (Halliday, 2008). Prius annual sales have grown to more than $1 million, which
makes up 10% of Toyotas sales worldwide (Kageyama, 2012). Toyotas plan for market growth
includes successful sales of hybrid offerings (Greimel, 2011) by increasing hybrid sales to 1.2
million cars per year by 2015. In North America alone, in 2010, Toyota sold 195,882 hybrids, of
which 143,890 were Priuses. In 2012, 236,000 Priuses were sold in the US alone, an increase of
73% over 2011.
Competition is a risk for the Prius, as more automakers begin to offer hybrid options. Job
(2012) suggests that the Ford C-Max will be a serious contender against the Prius, has better fuel
economy than the 2012 Prius v and the 2012 Honda Civic Hybrid, and has a roomy, stylish, and
smart design. However, the Consumer Reports publication (2013) refers to the Prius as a
bargain. While it is not the cheapest car in its class, it is spacious, reliable, and economical.
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Market Description
While the initial excitement around electric and plug-in vehicles has waned (Guilford,
2013), hybrids are still a focus of many automakers, including Toyota. Guilford (2013) also
provides further insight into the market through interviews with those in the auto marketing
industry. Buyers of these vehicles still tend to be new adopters, not really the mainstream public,
as many are still sceptical about the cars. While fuel economy is important to consumers,
environmental benefits and fuel economy are not necessarily as important as driving experience
and cost. To match its targets for growth, Toyota will have to appeal to the mass public, not just
those technology-driven early adopters, in the select states where these vehicles are sold, beforeexpanding into other markets. Currently, Toyota has 60% of the market share of hybrid vehicles,
which is down from 68% a few years ago. During the same time period, Fords market share
increased from 9% to 16% (Tuttle, 2013).
Toyota now offers four makes of the vehicle, including the basic Prius, the more compact
Prius c, the more advanced Prius Plug-in, and the more spacious and family-friendly Prius v.
This means that consumers will now have the option to purchase a fuel-efficient Prius with the
body style and price that suit their needs.
Table 1.1 Potential Customer Segment Needs and Corresponding Features and Benefits
Targeted Segment Customer Needs Corresponding
Features/Benefits
Customer A:
First-time Prius
customers
A technologically advanced,high-performance, fun to drive
vehicle that is fuel efficient,
has a sleek design, and is
Numerous upgradesand options to choose
from, four model types
to meet various needs,
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MARKETING PLAN FOR TOYOTA PRIUS IN NORTH AMERICA 3
customizable to individual
needs.
High safety rating.
unbeatable gas mileage,
and a new lower price.
Various safety features,
including extra airbags
and a high safety rating
for its class.
Customer B:
Current Toyota
customer looking for
a hybrid model
A current Toyota customer
will already enjoy fuel
efficiency and reliability. These customers, if looking to
try the hybrid, would be
looking for increased fuel-
efficiency, lower emissions,
sleek new styles and colors,
fun new technology and some
type of incentive to but a
hybrid.
Has the reputation of
the trusted Toyota
brand, with the addition
of increased fuel
economy and
trendsetting, sleek style.
New lower prices and
lower fuel costs means
less risk in switching.
Rebates for fuel
efficient vehicles.
Customer C:
Current Prius
customer
This customer may be a first-
generation hybrid model owner
looking for an upgrade.
This group needs to see the
benefits of the newer models,
including new available
Great service and
perhaps some type of
trade-in incentive for
older models.
Same great vehicle with
better prices and
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MARKETING PLAN FOR TOYOTA PRIUS IN NORTH AMERICA 4
vehicle options, updated
models and colors to choose
from, and the same great fuel
efficiency for a new lower
price.
Customers need to feel valued
in order to buy another Prius or
upgrade their existing car.
updated design.
New Plug-In model for
those who were early
adopters of the first
model.
Product Review
Prius
The Prius has a fuel economy of 51 mpg in the city and 48 mpg on the highway (50mpg
combined).
The vehicle offers combined benefits of an efficient gasoline engine, and a clean, quiet
electric motor with low emissions.
This models sleek body style and high -performance engine means it is fun to drive and
yet has high safety ratings in its class and comes equipped with Toyota s Star Safety
System.
New pricing for 2012 Toyota hybrids is lower than before (Toyota website). The 2013
Prius starts at $26,100 US, making it similar in price to non-hybrid vehicles of its size.
Prius c
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Prius model but do not always offer the same level of gas mileage, depending on the
comparable model.
Honda
Honda has three hybrid models that could compete with the Prius the Civic Hybrid,
the Insight, and the CR-Z. Again, these vehicles are at a slightly lower price point
than the Prius and the Prius v, which are the most comparable models. The body style
is sleek and modern, but according to the 2012 model AutoGuide.com review, the gas
mileage is once again not comparable to the Prius.
Chevrolet
The Chevrolet Volt is a plug-in car and is therefore competition for the Prius Plug-in.
The price point is very similar, but these vehicles dont yet have the popularity or
reputation that the Toyota hybrids do.
Channels and Logistics Review
The Toyota Prius will be distributed through the 1,500 Toyota dealerships throughout the United
States (Toyota, n.d.).
Section 2: Strengths, Weaknesses, Opportunities, and Threats Analysis
Toyota is a well-respected brand in the auto industry and the Prius was, as the tagline states,
The one that started it all. However, some of the initial hype around hybrids has waned.
Strengths:
The first hybrid on the market; the one that started it all.
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Reputation of being a trailblazer in the hybrid industry.
Best fuel efficiency of all comparable hybrid models.
High safety ratings.
High-tech options in each version of the Prius.
Spacious interior and choice of size due to four model offerings.
Toyota has a proven track record, and was the worlds top automaker of 2012.
Weaknesses:
Reputation for a significantly higher price than non-hybrid vehicles.
Slightly higher priced than other comparable hybrids.
Fuel economy can vary greatly depending on how the vehicle is driven.
Perceived premium cost.
Opportunities:
New model style options can appeal to new target audiences, such as families and
younger consumers.
Climate change continues to be a growing concern.
Gas prices remain high and somewhat volatile in North America, increasing the appeal of
fuel efficient vehicles.
Consumers still cautious in terms of spending, but this might be an opportunity to
highlight lower prices and newer model options.
Threats:
Increased competition, especially from North American automakers in the North
American markets.
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Impact of economic downturn is still evident in more cautious consumer spending
patterns.
Although Toyota was named automaker of the year, some will be cautious to purchase these
vehicles after product recalls within the past five years, and the subsequent negative media
coverage that followed.
Table 2.1 Strategic Matrix
Strategies to address opportunities, reduce vulnerabilities, and create defensive plans around
potential weaknesses.
STRENGTHS WEAKNESSES
OPPORTUNITIES Continue to position Prius as
a trailblazer among hybrids.
Focus on Toyotas strong
reputation and brand.
Build on well-known facts
such as fuel efficiency and
safety rating.
Build on already positive
media coverage with
proactive media plan.
Reposition Prius in terms
of its new lower cost.
Educate customers on how
to get the best fuel
mileage upon purchase, to
manage the expectations
of customers.
THREATS Position Toyota as an
innovative automaker and
Build on new vehicle
safety ratings to prevent
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take advantage of the fact that
newer North American
hybrids may not have the
reputation that Toyota does.
Maintain market share of
hybrids by targeting first
generation Prius customers
and other Toyota owners for
new sales.
customers from being
wary as a result of recent
vehicle and parts recalls.
Focus on value to
customers to ensure that
the slightly higher price is
seen as worth the value
due to higher fuel mileage
and proven track record of
high-quality vehicles.
Section 3: Marketing Strategy
Positioning
Differentiate the Prius from other new brands of hybrids by continuing to brand it as the
original hybrid. This positions the model as a leader in the hybrid market. The new model
offerings in the Prius line of vehicles allow the hybrid to appeal to a wider variety of consumers.
The marketing communications campaign will focus on the vehicles innovative fuel technology,
new lower pricing, and style options to fit any lifestyle.
Product Strategy
Toyota is now rolling out three new models of the Prius vehicle, including a new Plug-In
model. Each model and its marketing will be aligned with its respective target market. New
models will be tested by Toyota employees and employees within the distribution network. The
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newest product, the Prius Plug-In, will be rolled out first in California, which is the most
successful market for the Prius to date. As the product is still in the growth stage, the company
will offer rebates for purchasing these green vehicles, as well as extended vehicle warranties.
Customers will be offered one-on-one Prius experience test-drives, where the dealership also
provides education on the cars new technology and how to get the best fuel mileage from their
Prius.
Pricing Strategy
Toyota is offering the new Prius for a slightly lower starting price. In this case, The Prius
c starts at less than $20,000, which is a very competitive price for a smaller car. Although
competitors prices are slightly lower, the Prius is a trendsetter in the hybrid market, and the
value, reputation, safety rating, and higher fuel efficiency are worth the slightly higher price. By
offering customers four different base models to choose from as well as various additional
features and options, the Prius provides consumers a wide variety of value-added pricing options.
Rebates should also be provided and used in the marketing communication pieces to encourage
the purchase of a green vehicle. In -car road side assistance could also be included to increase
the perceived customer value by offering a higher level of service to the customer. As Consumer
Reports (2013) suggests, this car is high value for cost. Therefore, lowering the cost further is
not recommended, as it could negatively impact consumers perceptions vehicle value.
Distribution strategy
Despite the fact that many automakers are moving toward reducing the number of dealers
in their distribution system, legal and cost barriers prevent this change from happening quickly
(Bucklin, Siddarth & Silva-Risso, 2008). It is important for consumers in target markets to have
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access to dealerships, and it is important for the company to work closely with dealership
partners to ensure the success of vehicle sales.
Another important aspect of distribution is inventory management. Trunick (2007)
suggests that not having appropriate inventory in place (either too much or too little), can be
costly for any retailer. Because the Prius is a newer, and highly customizable vehicle, production
will somewhat be dependent on demand. However, if enough cars of each model are not
available for purchase, the customers perception of brand service and value can be impacted.
Ideally, Toyota would ensure a number of intermediate distribution sites in carefully chosen
locations, so that a vehicle is not sitting unsold too long in a dealership but can also be
transported to a dealership quickly if a customer is interested in purchasing the vehicle.
Marketing Communications Strategy
Audience Analysis
Demographics: The Prius customer varies depending on the model. Urban families,
professionals, or even college students are target audiences. The compact design of the Prius c
would appeal likely to women more than men, as would the family-style Prius v. The compact
model would likely appeal to women under the age of 30 or over the age of 45 due to limited
cargo space, which is not ideal for families. The wagon-style v model would appeal to women in
the middle of that age group, between 30 and 50 years old. The Prius, on the other hand, with its
sleek styling, road performance, and slightly higher price point, would more likely appeal to
professional men between the ages of 30 and 50.
Frequency: Customers will use their vehicle every single day and ar ent likely to buy a vehicle
more often than every four or five years.
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Purpose : The Prius is more than a means to get from point A to point B. This car will make sure
you enjoy the ride. It will get you to work but it will also be fun to drive on the weekends and
has the cargo space and gas mileage for a stress-free weekend road trip.
Loyalty: Toyota customers are loyal, in part thanks to the reliability of their vehicles as well as
the companys reputation for quality. However, customers of other veh icle brands may be
swayed to fuel-efficient vehicles due to high gas prices, especially in North America.
Spend: These are not budget vehicles and will likely be most attractive to those who want a
premium feel with a low-to-mid-level price point. Premium purchasers will likely be more
interested in hybrid offerings from brands such as Lexus.
Table 3.1 Whole Brand Contact Inventory
Brand
Contact
Importance
Evaluation
Impression
Evaluation
Customer
Expectation
Customer
Experience
Message Sent Resources
currently
allocated
Dealership
sales teams
High Mixed Excellent,
honest service
Consistent
with other
dealerships
We appreciate
your sales, and
know our
reputation will
bring more
Adequate
Dealership
Service
Centres
Medium Mixed Quick, cost-
effective
service from
expert staff
Varies
depending on
the
dealership
Depends. Good
service suggests
that they are
proud of brand
Could usemore to
ensure
consistency
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Company
reputation
High Positive Positive
reputation for
great service,
quality and
value
Low-
maintenance,
good value
for product
and
consumers
can have
confidence in
their
purchase
Buying a Toyota
is a good choice,
and a Prius is a
great option for
certain
audiences
Could be
improved
following
recalls in
2009-2010
Advertising Medium Positive Realistic,
honest
information
about how
product will
meet customer
needs
Depends.
Effective if it
reflects
messages at
other brand
contacts
The company
has information
to share
Could be
used to better
promote new
line of Prius
models
Media Medium Positive Unbiased
information
and coverage
of products and
company
Customers
depend on
the media for
honest
feedback on
products
If unbiased
reporters say its
a good car, it
must be a good
car
Adequate
positive
coverage
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Employees High Mixed Employees
should be
brand
advocates and
speak
positively of
the product
Employee
stories are
trustworthy
and
important
If employees are
happy, its likely
a good company
Could better
use
employees as
brand
ambassadors
Word of
mouth
High Positive Honest
feedback from
friends and
other trusted
consumers
Most Toyota
customers are
happy and
tell their
peers
Word of mouth
is trustworthy
information.
Positive, but
could always
improve
Website Medium Positive Easy-to-access
information
Easy to
navigate and
find
information
Provides tone
and feel of a
vehicle - Prius
site is fun, crisp,
and modern
Adequate
Social
media
High Mixed Honest,
unfiltered
feedback
Mixed
reviews
Company is
responsive and
modern
Not enough
Community
Investment
Medium Positive Companies
should also be
responsible
corporate
citizens
Help create a
positive
feeling
towards a
company
The company
cares about the
communities it
serves
Already do a
great job
built on this
and tie to
incentives
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Table 3.2 Whole Brand Contact Priority Grid
Important
Negative Positive
Less important
Section 4: Action Programs and Budgets
Action Programs
Employee Engagement Strategy
Develop an employee testing and incentive strategy. The first part of the strategy
includes inviting various employees and dealership employees to provide feedback throughout
the product development process. This includes having employees test drive the new products
and developing an online portal where employees can provide feedback and comments on the
new designs and help provide input into newer models. The second aspect of the employee
engagement strategy involves offering employees discounted pricing, only slightly above cost,
on new models so that they are more likely to purchase the vehicles and become brand
ambassadors for the product. Staff will have access to the new models six weeks before the new
models roll out, and will then be encouraged to post information about the new vehicles and
incentives on social media as well, which will be part of a larger social media campaign.
ISocial media
Dealership sales teamsCompany reputation
IIWord of Mouth
EmployeesMedia
IIIDealership Service Centres
IVWebsite
Advertising
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Word of Mouth/Social Media Campaign
A social media campaign will be developed to complement an advertising campaign.
The social media campaign will launch with teaser Twitter and Facebook posts, as well as
Instagram photos of the new models new features. Following three weeks of teasers, employees
will be encouraged to share their experiences, photos and favourite features of the new models.
This campaign will last three weeks as well, and the last week will be coordinated with the
launch week of the new models. For the first month of sales, the social media campaign will
continue with employee stories, at which point contests will be launched to entice customers to
share their stories as well, to be entered to win free car washes or even trips to locations such as
Costa Rica or other countries where rainforests are protected. These types of incentives are well-
aligned with the product, as taking care of a new vehicle is important, and as environmentally-
aware consumers may be attracted to the Prius for its environmental benefits, a trip incentive to
this type of location may be an effective for this audience.
Media and Community Investment Strategy
Both Toyota and Prius already have positive media coverage, since being named the
number one automaker of last year and the best-selling hybrid, respectively, and have recovered
from some of the negative press as a result of product recalls within the past five years. While
theres much positive press regarding the reputation of the vehicles and sales, a media campaign
highlighting increased sponsorships could help position Toyota as a good corporate citizen.Toyotas investment guidelines suggest that they focus on environment, education and safety,
which are well-aligned with product offerings. Investments in parks, community clean-up days
(based in schools and communities), and sponsorship of energy efficient community complexes
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or vehicle donations, could be well-aligned with a major selling feature of the Prius its reduced
environmental footprint. Advertisements highlighting community partnerships will be
developed, in conjunction with media events to announce partnerships and investments in
various communities.
Dealership Sales Teams
Customer service is vital to a companys success. If customers have a negative
experience, they will share those experiences through social media and word of mouth. This can
limit the effectiveness of media and advertising campaigns. Additional investment in customer
service can be used to ensure employee training targets the importance of customer service, to
implement customer satisfaction survey incentives, and to extend versions of employee vehicle
purchasing incentives to dealership partner employees. Ensuring employees are educated in
customer service and are invested enough in the brand to act as brand ambassadors, can help
ensure a higher level of customer service, which can help attract new customers. By using the
sales force to personally contact customers who have purchased a Prius in the past, they can gain
insight into whether a customer is looking to upgrade a vehicle and offer them further incentives
to test drive and purchase a newer model.
Website
A companys website is often the first place a customer experiences the brand. Toyotas
Prius website is modern, clean, and easy to navigate and reflects the value of the brand. A space
for customer and employee testimonials, as well as a social media feed, are important to link the
various channels, messages and incentives.
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Advertising
Advertising is important way to reach the target audience and each customer group
should receive tailored messages through very specific channels. To reach customers in Group
A, an initial advertising campaign utilizing television, print and online ads would be effective in
presenting the features of the Prius to the target audience. Ad placement could include social
media, online advertising on major news sites and auto sections of the sites, as well as print
newspapers in both the news and driving sections. These ads would be effective in targeting the
professional or business-focused audience. College papers could be targeted to reach those about
to graduate to promote models such as the Prius c, and morning shows could be useful in
promoting the new v model to women in the target audience, who would influence family vehicle
decisions. Following the initial campaign, a secondary campaign will focus on community
investment and employee and new customer testimonials, in conjunction with social media
campaigns and media events. Lastly, a direct mail campaign could be implemented to reach
first-generation Prius owners, offering incentives for trade-ins and purchases of newer models.
Marketing Investment
Allocation of marketing dollars is included in the Return on Customer Investment
spreadsheet below. The expenditures are aligned with the specific channels, messages and
incentives developed to reach target audiences. The total marketing communication budget is
$4.9 million, which leaves and additional $100,000 to be used as needed upon evaluationthroughout the campaign. The category demand, or goal for increased revenue, is based on a
10% increase overall in sales based on the 236,000 Prius sales in 2012.
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Table 4.1 Return on Customer Investment
AggregatedCustomer
Group
Group A:First Time
Prius Buyer
Group B:Switchersfrom other
Toyota model
Group C:PreviousPrius
customersBehavioral Goal Increase Increase Maintain
Category Requirement Assumptions
1 Estimated Category Demand 7800000000 390000000 195000000 195000000
Base Income Flow Assumptions
2 Base share of requirement % 60.00% 20.00% 20.00%3 Base income flow to us $ 234000000 39000000 39000000
4 Noncommunication costs % 70.00% 55.00% 65.00%5 Contribution Margin % 30.00% 45.00% 35.00%6 Contribution Margin $ $ 70200000 17550000 13650000
Scenario A: No CommunicationsInvestment
7 Change in share of requirement positive or negative % 20.00% -30.00% -5.00%8 Resulting share of requirement % 72.0% 14.0% 19.0%
9 Resulting customer inflow to us $ 280800000 27300000 37050000
10 Less noncommunication costs -196560000 -15015000 -2408250011 Less marketing communication costs -$ 0 0 0
12 Net contribution $ 84240000 12285000 12967500
Scenario B: Communication Investment
13 TV Advertising $ 500000 50000 2000014 Radio Advertising $ 100000 5000 015 Consumer Magazines $ 300000 25000 0
16 Direct Mail $ 500000 250000 50000017 Sales Promotion $ 250000 50000 5000018 Public Relations $ 100000 50000 3500019 Special events/sponsorships $ 1000000 200000 1500020 Custom Media $ 250000 50000 021 Customer Service Improvements $ 200000 200000 20000022 Total Br and Communi cations Investment $ 3200000 880000 82000023 Change in the share of requirement Estimate % 36.00% 0.00% 15.00%24 Resulting share of requirement % 81.6% 20.0% 23.0%25 Resulting customer income flow to us $ 318240000 39000000 44850000
26 Less noncommunication cost $ 222768000 21450000 29152500
27 Less brand communication cost $ 3200000 880000 82000028 Net contribution $ 92272000 16670000 14877500
ROCI Calculation
29 Net contribution scenario A 84240000 12285000 12967500
30 Net contribution scenario B 92272000 16670000 14877500
31Incremental gain/loss v. No investmentscenario 8032000 4385000 1910000
32 Incremental ROCI 39.84% 20.07% 42.93%
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Section 5: Summary
This marketing plan aims to using targeted messages and incentives to increase the
market share of the Toyota Prius in the North American hybrid market. As stated in the current
market situation, the Prius already holds 60% of the hybrid market share, but this has declined in
recent years. This strategy aims to reverse that pattern and increase sales from the previous year
by a minimum of 10%.
As outlined in the SWOT Analysis, one of the main threats to the Prius is the increased
competition from North American automakers who are releasing new, competitively priced
hybrid models. However, price is only one aspect of brand value, and the Prius`s competitive
advantage is that their reputation and fuel economy is superior to other models. Marketing
materials will build on their reputation and continue to highlight the strengths of these models,
using both informative marketing materials, supplemented with a more grassroots, customer and
employee-centred approach.
The $4.9 million investment in marcom activities is targeted at the three main customer
section, based on the current brand inventory assessment. Based on the Return on Customer
Investment calculations, this targeted investment will have a significant impact on revenue from
Prius sales. As outlined in Table 4.1, Prius will see a 16% increase in sales due to marketing
activities targeted to new customers, or Customer Group A, alone. For Customer Group C, or
previous Prius customers, without an investment in targeted marketing activities, Prius will see aloss of 5% of these customers; however, as a result of the proposed strategy, this customer group
will instead increase by a projected 20%. In comparing the incremental gains and losses in the
first scenario, with no marketing investment, and the proposed marcom plan across all three main
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target audiences, it is evident that the $4.9 million marcom investment will result in an additional
$14.3 million in revenue for Prius.
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Bucklin, R., Siddarth, S. & Silva-Risso, J. (2008). Distribution intensity and new car choice.
Journal of Marketing Research, XLV, 473-486.
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