The Potential Market Segments for the Toyota Motor Corporation. Free Essay

Market segmentation is the grouping of the target market into smaller and more defined categories sharing common characteristics such as needs, demographics, interests, and location (Smith, 2010). Market segmentation is a necessary process and tool that can be used in identifying customers’ needs that have not been satisfied. For a traditional motor company like Toyota, many challenges are faced due to the rapid changes and trends in the economy. As a result, the company needs to focus on some potential market segments other than the current traditional ones. The following are some of the recommended market segments that Toyota Motor Company should target.

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The Middle-Class Population

The Segment Size and Potential Growth

The middle-class population is a very potential segment that Toyota needs to target. The population struggles with a lot of bills and therefore may find it difficult to service and maintain a car, rendering most of them incapable of purchasing one (Smith, 2010). Toyota needs to develop vehicles that are cost-efficient and cheaper than the average. The cars should also be eco-friendly, as this is the new normal, and automobile companies must focus on achieving green production. The world is made of 48% middle-class people, a number that any marketer should not ignore in potential grouping segments (Halbright & Dunn, 2010). The United States has always had the highest number of middle-class people, but Canada came in, and it has the wealthiest middle-class as of 2015 (Halbright & Dunn, 2010). Therefore, Toyota needs to target this potential segment of the market.

The company must not overlook traditional features like design and safety. They must also understand the consumer target needs of middle-class people are understood. For this segment of the market, one important element to be considered in marketing to them is the incentives. In 2017, the global middle-class size increased to about 3.5 billion, from 1.8 billion in 2009 (Halbright & Dunn, 2010). According to Halbright and Dunn (2010), the middle-class population is expected to grow to 4 billion by 2021, and by 2030, it is expected to hit a hooping 5.3 billion. This is an indicator of the potential growth of this segment, which is a reason why marketers and brands should focus on them.

The Segment Attractiveness Structure

The next big thing in the global automotive industry is electric vehicles, with demand and interest originating worldwide. There is an increasing need for low-pollution and fuel-efficient cars from the Asia-Pacific countries and the demand for affordable cars from Europe and North American consumers (Smith, 2010). Those are the two key factors influencing the global market, and Toyota Company should commercialize and tap this opportunity by targeting this segment of potential customers who are the middle-class population.

The Company Resources, Objectives, And Values

The middle-class segment has the right size and growth, and besides, it is also structurally attractive. However, the company has to consider its resources and objectives and ensure that the needs of the customers in this segment mesh with its long-run objectives. The company needs to source the skills and knowledge needed to meet the requirements of this segment, such as hiring experts in eco-friendly automobile technologies to produce friendly environments. Toyota has the upper hand in exploiting this segment since it already has the personnel and technology required to meet such demands, and it can easily tap into this market while at the same time maintaining its objectives and values (Halbright & Dunn, 2010).

Millennials

The Segment Size and Potential Growth

The other potential target segment for Toyota should be the millennials, who have broad tech knowledge and an early adoption attitude. In targeting this segment, the company should make major improvements in its products through advancements in battery technology, resulting in an increased range. Demographically, millennials are the most racially and ethnically diverse generation (Chen, 2017). Toyota should target this potential segment by venturing into electric vehicles since this segment portends well for electric vehicle producers. They are open to new products and are more in tune with technology. Besides, millennials are of car-buying age as they are in the income levels.

The millennials segment size has been considered to be the largest and most influential generation of consumers. According to Chen (2017), millennials will form over 75% of the total global workforce, portraying a positive potential growth, hence making them an ideal target. The segment has a high level of attractiveness given their high numbers, long-term brand loyalty, and their diverse nature, among several other factors, such as being the dominant population in the workforce and income group (Chen, 2017).

The Segment Attractiveness Structure

According to their psychographics, millennials are impatient (Chen, 2017). They are usually willing to take the easier alternative, making them an easy target by the company through changes with a slight touch of technology (Chen, 2017). Besides, they are also adventurers and love luxurious things. In terms of their behavioral characteristics, millennials are the most brand-loyal generation with a strong loyalty status (Chen, 2017). Therefore, the company should make efforts at winning, targeting and ensuring they remain loyal to the new products. This segment is further made more attractive due to their power relative to that of other buyers. Millennials also do not have aggressive and strong competitors making them more attractive (Chen, 2017).

The Company Resources, Objectives, And Values

To effectively target this segment of the market, the company will have to invest in technology and physical appeal of their cars. The millennials are tech-savvy, which should be one of the objectives of Toyota in attracting many of them. The cars must also be durable and eco-friendly to increase the customers’ loyalty since this segment is environmentally and health-conscious.

Conclusion and Recommendation

Market segmentation is an important process and tool that can be used in identifying customers’ needs that have not been satisfied. The two segments that I would advise Toyota Motor Company to target are the millennials and the middle-class populations. The middle-class struggle with a lot of bills, and therefore may find it difficult to service and maintain a car, rendering most of them incapable of purchasing one. Toyota needs to develop cars that are cost-efficient and cheaper than the average. The company needs to source for the skills and knowledge needed to meet the requirements of this segment, such as hiring experts in eco-friendly automobile technologies to produce cars that are friendly to the environment.

Toyota should target the millennials by venturing into electric vehicles since this segment portends well for electric vehicle producers as they are open to new products and are more in tune with technology. Millennials are impatient and are usually willing to take the easier alternative, making them an easy target for the company through changes with a slight touch of technology. To effectively target this segment of the market, the company will have to invest in technology and the physical appeal of its cars.

References

Chen, J. (2017). The Chinese automobile market and the strategies of European, American, Japanese, Korean and Chinese auto makers. International Relations, 5(5), 241-257. https://www.davidpublisher.org/Public/uploads/Contribute/595ca10ab34a7.pdf

Halbright, R., & Dunn, M. (2010). Case Study: The Toyota Prius. Managerial Marketing. https://www.maxdunn.com/storage/www.maxdunn.com/PMBA:%20Presidio%20MBA%20

Home/Prius_Marketing_Case_Study.pdfSmith, K. T. (2010). An examination of marketing techniques that influence Millennials' perceptions of whether a product is environmentally friendly. Journal of Strategic Marketing, 18(6), 437-450. https://www.tandfonline.com/doi/abs/10.1080/0965254X.2010.525249