Company Case: Prius: Leading a Wave of Hybrids

1. What micro-environmental factors affected both the first generation and second generation models of Toyota Prius? How well has to Toyota dealt with these factors?

In order for the reader to have an understanding of this question is important to begin by defining Micro-environment. This term is a factor of the Marketing Environment and it consists of the issues that, in one way or another, affect the company's ability to serve its clientele in a close and direct way. This includes factors such as customers, suppliers, competitors, shareholders, employees and media (among others). Having this in mind, it could be safe to state that the micro-environmental factors affecting the first and second generation of the Toyota Prius are the customers and the competitors.

Consumers, getting affected by the gas prices, were looking for an answer to their prayers. Toyota gave them the answer, a vehicle that would allow people to save on gas as well as provide good and efficient service. Once the first generation Prius was released, although not too pretty or fancy, it served to its purposed and customers were buying it.

The other factor, competitors, is pretty obvious. Everybody wants a piece of the pie. Auto makers such as Honda started developing and/or implementing the hybrid system on some of their vehicles. Toyota's answer was to keep developing what already has been a success, the Prius. A second generation was developed and released. This time the new generation was even more fuel efficient. It also included more technical advances, more room and several other factors that would make all types of clientele to be interested.

2. Outline the major macro-environmental factors – demographic, economic, natural, political and cultural - that have affected the Prius sales. How well Toyota dealt with each of these factors?

Macro-environmental factors deal the larger societal forces that affect the microenvironment. Some of the factors are demographic, economic, natural, technological, political and cultural forces. With that said, I believe the macro-environmental factor that affected the Prius sales (in a positive way) is the Natural forces. Now, it would not be fair if I do not mention the technology force as well as the economic one. So there is a vehicle that saves on gas, which means that also helps with the pollution. Technological advances are probably the base of the Prius and this gets even better with the second generation. The first generation was fairly basics while the second generation was release with more gadgets and extras. The prices of the gas keep raising non-stop. That fact definitely affected the sales of the Prius, especially in a society dominated by Sport Utility Vehicles (SUVs)

Macro-environmental factors

Demographics

Demographics are the study of human societies in terms of size, location, gender or race among other statistics. Based on these factors organizations develop marketing plans to target possible customers.

Economics

Basically, economics is the study of how society chooses to use its resources. I believe this factors contributes to the government and other entities to offer incentives towards buying vehicles such as the Prius.

Natural

This macro-environmental factor involves the use of natural resources to increase the interest of the customers. To be "green" is what is selling these days. Societies have a great interest and feel very positive about saving the planet. Toyota's marketing team has utilized such factor in a very positive way to cause sensation about the vehicle.

Technological

Well, after all, what would society be these days without all the technological advances? New technologies are hitting society constantly. Technology offers the opportunity for enhancement of current products as well as new ones. Toyota, using technology, made customers aware of upcoming vehicle. Utilizing tools such as the Internet it distributes brochures and all types of information about the Prius previous to its release.

Political

What would a society be without the government and its laws? This force is, with no doubt, connected to the economic one. Toyota, along and other auto makers were able to obtain tax and other incentives for people who would buy the hybrid vehicles. If other forces didn't cause any interest, this one definitely would. So, now you can save on gas and can also save on taxes. Also, in some cases, you were allowed to drive on the HOV lines even if only one person was driving. Isn't the government a good thing?

Cultural

This force along with demographics would set a base for what customers are interested in. Toyota's strategy hit society in what could probably be the best time. Gas prices are high and people drive vehicles that are not economical. Society is in the need of change and Toyota was offering a solution.

3. Evaluate Toyota's marketing strategy so far. What has Toyota done well? How might it improve its strategy?

In my opinion, and based on the case, Toyota brought a new product with a fairly strong marketing strategy. The only problem that I find is that the vehicle's target range is limited. The first generation of Prius was very simple and basic. It did not offer all those benefits and gadgets that come standard in many vehicles these days. On the other hand, the second generation brought a lot of changes, specifically technological advances. It also included a bit more of luxury and better style. This time Toyota, in my opinion, was carrying a more power marketing strategy pointed to more types of consumers. I think that Toyota is heading into the right direction in regards of its marketing strategies. Also, the Prius seems to be improving greatly in technological advances. Not only it running more miles per gallon but it also full of gadgets that make people interested about it. It is no myth that Toyota has leaded the automotive market with several of their vehicles. The whole Prius team including its marketing group is doing a great job when it comes to developing and advertising.

4. GM's marketing director for new ventures, Ken Stewart, says "if you want to get a lot of hybrids on the road, you put them in vehicles that people are buying now." This seems to summarize the U.S. auto makers' approach to hybrids. Would you agree with Mr. Stewart? Why or why not?

I believe I would agree with Mr. Stewart. It is a fact that people are buying cars because they like them or need them, and not necessarily because of gas efficiency. Now, if you add the gas efficiency factor it may motivate the consumers. In my opinion, the Prius is one of the ugliest cars that I have ever seen. Would I buy it based on the fact that will save me on gas? I wouldn't buy it, not only it's ugly, but also it does not serve to my purposes and tastes. Now, if we were talking about an SUV such as the GM Tahoe, I would probably be interested. Not only serves as an SUV, it also looks good and helps me save gas and to contribute with the environment. The Prius, although very economic on gas, may not be the best car for a family of six. Therefore, having other options that are based on the same concept could be very beneficial for Toyota, or any automaker out there.