Toyota is a well-known brand, especially to me because I have a Toyota Camry that I love. I wanted to learn more about the green marketing strategy, and I decided to focus mostly on the Prius marketing strategies, as it is a “green” vehicle and becoming very popular. The Toyota Prius provides a concrete case study of this truth. While the biggest product differentiation of the Prius is a fuel efficient, hybrid engine, most people do not buy it because it is eco-friendly. We assert that Toyota succeeded by marketing the Prius on multiple factors including the potential for gas savings, appeal to those who desire the latest technology, crossing into multiple market segments, and keeping the car practical, attractive, and functional. If they had appealed solely on impact to the environment, they would have failed to generate significant market penetration.
Toyota did not set out to create a hybrid car. Rather, the Chairman Eiji Toyoda was concerned about the increasing popularity of larger cars and of the effect it would have on pollution levels in increasingly congested cities. He was concerned about the threat of peak oil looming and believed that the traditional internal combustion engine would not successfully carry Toyota into the next century. It was a year into that effort that Toyota decided to adapt a hybrid approach to creating a car with a lower impact on the environment. Toyota was cautious in entering the American market (Itazaki, 1999).
Toyota's first step was to ship the original Prius that had been sold in the Japanese market beginning in 1997 to the U.S. These Prius' were right hand driving models as no left hand models had yet been produced. The car was shown to potential customers in Southern California who complained that the interior seemed cheap, the rear seats could not fold down, and it was not even possible to fit a baby stroller in the trunk (Taylor, 2006). Toyota quickly learned that their first Prius was a poor fit for the U.S. market.
The first generation Prius for the U.S. market was released in 2000 with increased power to both the internal combustion engine and electric motor. This new Prius met California emissions standards and included a lighter battery pack. U.S. consumers still found it to be under powered and burdened with other limitations including rear seats that did not fold down (Taylor, 2006).
Toyota hired Saatchi and Saatchi LA and Oasis Advertising of New York to help them advertise and position the new Prius. Working with these firms, Toyota realized that they needed to communicate not only the Prius' environmental advantages but also communicate how desirable and practical it was for regular, everyday transportation. The "PRIUS/genius" campaign launched as the result of this combined effort. (Geller, 2000).Starting two years before the Prius was available in the US, the campaign began by creating a dialogue with customers that resulted in 40,000 people expressing an interest in the Prius. These prospects were given early access to a private web site and were able to pre-order the Prius, which 1,800 did (Geller, 2000). The campaign then continued onto more traditional broadcast and print advertising and continued to combine interactive, outdoor and lifestyle marketing.
Toyota also worked with Mind Arrow systems to replace printed brochures with interactive, multimedia "eBrochures". This was very successful as 46% of the people that viewed the eBrochure clicked through to the Prius site and 36% requested additional information (Geller, 2000). While we are used to social media marketing today, Toyota was ahead of its time in using it back in 2000, and it is not surprising, that they succeeded in attracting innovators and some early adopters. Surprisingly, Toyota found out that the more extreme environmentalists were not interested in the Prius or other hybrids. They were frugal and turned off by the high tech aspects of the cars (Taylor, 2006). However, this early Prius did not stack up based on either features or price compared to its competitors and the marketing campaign heavily emphasized the car's green aspects. Toyota had only succeeded in selling to an audience of innovators and a limited number of early adopters who were drawn to the technology and willing to take a risk.
As a result these initial marketing efforts failed in their attempts to produce mass appeal and only 15,000 cars were sold in 2001 and approximately 20,000 were sold in 2002 (Vasilash, 2004). It was not until the next the next generation Prius debuted in late 2003 for the 2004 model year that began to take off. The new Prius was larger, had a more efficient drive train yielding improved mileage, and finally responded to earlier demands for a large cargo area with rear seats that folded down. Toyota had listened to its customers and met and exceeded their expectations. The marketing campaign focused on the new Prius' larger size and higher power and de-emphasized the fact that it also happened to be environmentally friendly. During this time, the Honda Civic Hybrid actually had higher sales than the Toyota Prius. Instead of focusing on early adopters, Honda introduced the Civic Hybrid directly to the mass market by taking advantage of Civic's existing brand equity and marketing it as having the added benefit of increased gas mileage (Rodriguez & Page, 2004).
Beginning in 2007, the Toyota Prius out sold all other hybrids. One reason for this increase in sales is that it had become "cool" to drive a hybrid. While the other hybrids looked just liked their non-hybrid counterparts, the Prius was easily recognizable due to its unique body design and distinct identity. When Prius buyers were surveyed in 2007 regarding why they bought a Prius, more than half said it was because it made a statement about them. Three years previously, only one-third had cited that reason. This status of Prius ownership was reinforced by the many celebrities and Hollywood stars that embraced the Prius (Maynard, 2007). The turning point for the Prius was triggered by it now being feature competitive with similar cars and by the new marketing campaign that shifted from a focus on early adopters and environmental friendliness to the mass market and economic benefits (Wigder, 2007).
In 2010, Toyota launched their new ad campaign entitled "Harmony Between Man, Nature and Machine." It emphasizes that there are no longer any tradeoffs between getting the features they want in a car, and getting high mileage to reduce CO2 and save the planet (Hodges, 2009). This campaign aims to reach a wider mass audience than previous campaigns and includes a larger role for social media including Facebook and Twitter.
The Toyota Prius holds 50% of the market for hybrid vehicles in the United States. That means that the combination of all other hybrid vehicles including the Camry, Civic, Escape, Highlander and Insight, together just match the sales of the Prius, and Toyota owns well more than half of the total Hybrid market.
It stands out that a significant majority of buyers surveyed felt that the Prius was less expensive than alternatives. In fact these respondents were more likely to purchase a BMW, Mercedes or other luxury car if they didn't purchase a Prius. A full 71% of the respondents stated that the fact that Prius was only available as a hybrid was either important or a very important part of their decision process (Klein, 2007).Toyota used penetration pricing strategy in order to build market share rather than skim pricing strategy of setting the price high initially and then dropping it as competitors entered. This was effective in gaining and holding onto market share. In every other case, buyers have to make a choice between a less expensive standard engine vs. amore expensive hybrid model, and each looks virtually identical. In fact, in some cases the storage space is significantly less than the non-hybrid version, causing the buyer to confront an obvious sacrifice.
The Prius creates high customer value by saving on fuel cost, saving time spent filling up with gas, generating Peer to Peer Buzz, creating Toyota's Reputation for excellent reliability, and by providing public (environmental) benefits without requiring a sacrifice.
Recommendations
An insight from this case study is that you cannot design an inferior product and expect to make up for it by being eco-friendly. Another is that while marketing to eco-friendly and early-adopter segments can produce some traction, sales will not really take off until there is a compelling message for the mass market. The Prius has also shown that by meeting a wide enough set of customers’ needs creating a broad appeal, coupled with strong branding, it is possible to crossover and successfully sell a product in multiple market segments.
When developing a green product, make sure that it is feature competitive even without its green aspects. Then when marketing the product, realize that most sales will be made regardless of its eco-friendliness. However, if you can establish some cachet around the product, people may buy it as a luxury good for the environmental status it conveys, as long as the product is distinct and highly recognizable.
Prius SWOT Analysis
Strengths:
•Best fuel efficiency of any midsize car
•Spacious interior
•Good performance compared to non-hybrid vehicles
•Comfortable
•Quiet at all speeds
•Smoother transmission than most other cars
•Appeal of latest technology
•Minimal impact on environment
•Excellent scoring on crash tests

Weaknesses:
•Fuel economy varies and optimization requires careful driving
•Premium price compared to similar non-hybrid cars
•Other cars are available in the same price range with significantly higher performance
•Requires use (albeit lessened) of a non-renewable resource (petroleum)
•Requires more energy to build than comparable non-hybrid cars

Opportunities:
•It is likely that petroleum will cost more in the future as supplies diminish which may increase demand.
•New 2011 PHEV (Plug-in Hybrid Electric Vehicle) will extend electric mode range and improve fuel efficiency
•Awareness of environmental concerns is growing
•Sales are likely spread to new markets in developing countries over time.

Threats:
•High mileage clean diesel based cars are becoming more available and will grab market share.
•Battery Electric Vehicles are fundamentally "greener" and cheaper to operate than the Prius and other hybrids
•Other hybrids such as the Chevy Volt will soon enter the market
•Toyota's recent negative press and widespread recalls are likely to scare some buyers away. It isn't clear how severe and long-lasting the impact will be to Toyota

Works Cited
Geller, M. (Sep. 1, 2000). ANATOMY OF A BUY - Hybrid Campaign for a Hybrid Car. Media Post Magazines. Retrieved from http://www.mediapost.com/publications/index.cfm?fa=Articles.showArticle&art_aid=8882
Hodges, A. (May 18, 2009) Toyota Prius Hybrid Launches 2010 Marketing Campaign. Retrievedfromhttp://www.newsoxy.com/toyota-hybrid/prius/article11914.html
Itazaki, H. (2009). The Prius That Shook the World. Nikkan Kogyo Shimbun Ltd.
Klein, J. (2007) Why People Really Buy Hybrids. Topline Strategy Group. Retrieved from http://www.toplinestrategy.com/Topline_Strategy_Report_Why_People_Really_Buy_Hybrids.pdf
Maynard, M. (Jul. 4, 2007). Toyota's hybrid car more than a mixed success. The New York Times. Retrieved fromhttp://www.nytimes.com/2007/07/04/business/worldbusiness/04iht-hybrid.4.6491389.html?r=2
Rodriguez, A. & Page, C. (September 2004). A Comparison of Toyota and Honda Hybrid Vehicle Marketing Strategies. Rocky Mountain Institute. Retrieved from http://www.solsustainability.org/documents/cultivatingmarkets/A%20comparison%20of%20hybrid%20vehicle%20marketing%20strategies.pdf
Taylor, A. (Feb. 21, 2006). The Birth of the Toyota Prius. Fortune Magazine . Retrieved fromhttp://money.cnn.com/2006/02/17/news/companies/mostadmired_fortune_toyota/index.htm
Vasilash, G.S. (2004). The Toyota Prius: The Most Important '04 Model? Yes. Automotive Design and Production. Retrieved fromhttp://www.autofieldguide.com/articles/100302.html
Wigder, D. (Apr. 29, 2007). Hybrids Shift into the Mass Market. Future lab. Retrieved from http://www.futurelab.net/blogs/marketing-strategy-innovation/2007/04/hybrids_shift_into_the_mass_ma.html