Team C examines the channeling and pricing strategies of the Toyota Motor Corporation for the team’s product launch. The assignment explores the appropriate channel strategy for both the domestic market as well as the international market through direct exporting channels. The team justifies Toyota international market through extensive research on the chosen product. According to Toyota New Release “Toyota Motor Corporation (TMC) announces that cumulative sales in Japan of its hybrid vehicles have topped the one million mark, while more than 2. 8 million units have been sold globally as of July 31, 2010” (Sales in Japan of TMC Hybrids Top one Million Units, 2010, p. 1). Examining a set of logistics objective, Team C is ready to design a logistics system that will minimize the cost of attaining these objectives. The major logistic functions include channeling the product, pricing, and the justification for the team’s choice for both the domestic and international markets (Armstrong & Kotler, 2009).
Justification for choice of international market Team C chose Japan as its international market because of its increase in production, sales, and exports. Japan has been supportive of Toyota products, selling over millions of units within the past year. The reason for this increase is because of the availability of cars that Toyota offers, providing superior gas mileage and a compact structure. For example, cumulative sales in Japan of its hybrid vehicles have sold more than half of the units produces globally, which marks more than one million vehicles sold (Toyota News Releases, 2010).
In July alone, Toyota has seen a major increase in the production, sales, and exports on an average of 14. 1% (Toyota News Releases, 2010). The sales in Japan are at its 12th consecutive month of increase with Lexus-vehicle sales at 37. 1%, and the share market at 49. 2% (Toyota News Releases, 2010). Production and exports have increased 48. 2% percent with a record of 12 consecutive month incline (Toyota News Releases, 2010). Team C believes it would be vital to continue sales and production in Japan because of the recent increase in Japanese market share and the support and loyalty to Toyota products.
Channel strategy for domestic and international markets The appropriate channel strategy for both the domestic market as well as the international market would be the direct exporting strategy. Direct exporting strategy ensures a domestic department to evolve into an operational profit making center and an export division. Direct exporting will serve as a channel for the international market and for overseas subsidiary handling sales and distribution; including the warehousing and promotional advertising of the product.
As a result, this channel will also serve as a customer service arena that successfully markets and displays the product (Kotler & Keller, 2007). Additionally, the direct exporting channel will use foreign agents and distributors to facilitate the effective development of the international market. Justification Selecting a successful channel strategy is critical because Toyota Motor Corporation is incredibly competitive globally and is the highest ranking automotive name in the world, coming in ahead of Mercedes, BMW, Honda, Ford, and Nissan (Toyota Production system, 2010).
Equally too, product differentiation is important, as Toyota should attempt to differentiate its product in terms of quality, weight, size, and eco friendliness. Worldwide demands for hybrid vehicles are escalating domestically and within the international markets. Expanding the market ensures an increase in investments thus building a stronger brand name through further research and development. Achieving satisfying supplier relationships has been a cornerstone of Toyota’s success, and this will be a catalyst as Toyota seeks product launching in international markets.
Impressively, Toyota has shown continued growth in the domestic markets and with continued effective brand management that safeguarded its reputation as a manufacturer of reliable automobiles both domestically and internationally (Toyota Production system, 2010). Domestic and International Pricing Strategies The price of a product is a key element that produces revenue and is the most flexible because price changes can occur quickly if needed. The decision to lace a price on a product can be complex thus, warranting marketers to consider a number of elements; the company, its marketing strategy, target markets and brand positioning, the customer, and the competition and the marketing environment. Companies generally set prices according to the geographical demand and cost, market segment requirements, purchase timing, order levels, delivery frequency, guarantees, and other factors (Armstrong & Kotler, 2009).
Should the company decide to explore an international market, marketers should take in consideration that companies channeling a product into another country prices its products with the customers as a satisfied benefactor. The marketers must consider the cost of shipping or decide the geographical pricing strategies; purchasing a foreign vehicle, the consumer usually absorbs the cost of shipping in each geographical location (Armstrong & Kotler, 2009). Most companies adjust prices to reflect local market conditions and cost considerations.
The price that a company should charge in a specific country depends on many factors, including economic conditions, competitive situations, laws and regulations, and development of the wholesaling and retailing system (Armstrong & Kotler, 2009). Cost is important when considering trade in another country because the cost is higher. The additional cost stems from shipping, insurance, import tariffs and taxes, exchange-rate fluctuations, and physical distribution (Armstrong & Kotler). Conclusion Team C explores the appropriate channel and pricing strategy for both the domestic and international market for the chosen product.
The chosen country is Japan because of its increase in production, sales, and exports. Therefore, the appropriate channel strategy for both the domestic market as well as the international market would be through direct exporting. Direct exporting ensures a domestic department to evolve into an operational profit making center and an export division. Japan has been supportive of Toyota products which are shown in the millions of units sold over the past year, thus making it vital to continue sales and production in Japan.
The escalating demand for hybrid vehicles forges expanding the market and ensures an increase in investments thus building a stronger brand name through further research and development. The price of a product is the one element that produces revenue and is one of the most flexible elements. The decision to place a price on a product can be complex thus warranting marketers to consider a number of elements; the company, its marketing strategy, target markets and brand positioning, the customer, competition, and the marketing environment.
Armstrong, G., & Kotler, P. (2009): Marketing: An Introduction (9th Ed.). Upper Saddle River, NJ: Pearson/Prentice Hall. Kotler, P., & Keller, K. L. (2007): A Framework for Marketing Management (3rd Ed.). Upper Saddler River, New Jersey: Pearson/Prentice Hall. Perreault, W. D., & McCarthy, E. J. (2006): Basic Marketing: A Global-Managerial Approach (15 Ed.). New York, NY: McGraw Hill Companies. Sales in Japan of TMC Hybrids Top 1 Million Units (2010): Toyota New Releases. Retrieved from http://www2.toyota.co.jp/en/news/0/08/0805.html TMC Announces Results for July 2008 (2008): Toyota New Release; Retrieved 27, August 2010. Retrieved from http://www2toyota.co.jp/en/new/0/08/0827 Why is Toyota Successful? (2010): Toyota Production System; Retrieved 27, August 2010. Retrieved from http://www.toyoland.comm/toyota/production-system.htm1