Toyota Motor Corporation has big plans to be a dominant player in China's auto market, currently controlled by European and American automakers such as Volkswagen and General Motors.
Late last year, it stepped up the pressure by entering into a long-term television programming alliance with Star's flagship entertainment channel on the mainland, Xing Kong. But plans started to go seriously awry around Christmas, when the Japanese auto giant began a big push on two new lines - the Land Cruiser and the Land Cruiser Prado.
The campaign consisted of two main print ads: one showed stone lions, a symbol of authority and power, saluting a passing Prado, while another featured a Land Cruiser apparently towing a Chinese military vehicle (Media, February 27). With China still sensitive about Japan's role during World War II, the ads backfired badly.
Until recently, Toyota produced only the Vios line of passenger cars with joint-venture partner First Automobile Works. With the Land Cruiser and the Prado, to be followed by the Crown and Corolla models, Toyota's strategy is to attack different segments of the market. Its goal is to produce 400,000 vehicles by 2010 for a 10 per cent control of the total auto market and 20 per cent of the passenger car market. Toyota currently produces 100,000 vehicles a year through its China JV.
According to Nielsen Media Research, it spent about US$40 million on marketing communications last year, compared with total category spend of $560 million. But with competition heating up, the Landcruiser campaign could prove to be a serious setback for the carmaker. Observers said that Toyota must take quick steps to resolve the situation. Making an apology and lying low isn't an option, they said.
Philippe Coquelle, ACNielsen China automotive research director, said: "The country is entering the global motor industry with intense competition in terms of models and brands. Manufacturers' top challenges are to build share of voice, capture consumers' share of mind and eventually the share of market."
VITAL SIGNS
Adspend-2003
BRAND Total
Volkswagen US$83 million
General Motors US$44 million
Toyota US$40 million
Audi US$36 million
Mercedes-Benz US$3 million
Source: Nielsen Media Research.
DIAGNOSIS
Colin Bates, Founder, director www.buildingbrands.com
According to Toyota, it has been in the China market since 1964 and we are now seeing "a decades-long relationship bloom". Yet the local and international press are still talking of Toyota as "late to the game in China" (BusinessWeek) and "lagging many of its rivals in the market" (Asahi Shimbun). The truth, of course, is somewhere between the two. Toyota was an early entrant to China, but spent most of the '80s and '90s focused on the American market. This probably explains the problems the brand is currently facing. Recently, Toyota banged heads with a local car manufacturer, Geely, over use of intellectual property, and lost .
Then Toyota produced those ads for Prado. "The ads were intended to reflect Prado's imposing presence when driving in the city" - so said a representative of the agency (who shall remain nameless). It's difficult to think of a better argument for the value of pre-testing advertising.
I'm also told that the Prado name, translated into Chinese as badao, can mean 'rule by force' or 'overbearing', clearly inappropriate, especially for a Japanese brand in China.
These branding problems, from intellect 'lost property' to communications mismanagement and brand naming challenges are obscuring the 'truth' of the Toyota brand in China.
TREATMENT
The fact is that Toyota has a good range of vehicles, from the Crown to the Land Cruiser, to gain market share in China. To achieve this they should:
- Lau Seng Yee, Chief executive officer, BBDO CNUAC China
Marketing to an audience that is characterised by an immense national pride is fraught with peril. Toyota has found itself in a tight spot in the aftermath of outraged consumer sentiment, caused by a not-so-subliminal display of Japanese imperialism.
But it would be unfair to say that all is lost for Toyota. It has garnered share and, in some cases, is considered younger and as aspirational (if not more so) than its European and American counterparts.
China is a consumer environment where one of the most probable motivations to buy is the desire to conform, in order to be part of what the brand represents outwardly and what it offers you for your money. Toyota is still, among its existing consumer base, revered for its functional superiority and the value it brings in turn.
Internationalism works in different ways. Here the question comes down to that of provenance. Japanese brands are still considered technologically progressive. But what may have gone wrong for Toyota was the blurring of lines between culture and provenance. However, let us not forget that China is also a very pragmatic society - but while it may be okay to bring superior Japanese technology to the consumer, it's not a great idea to metaphorically unite this with very definitive cultural icons like the stone lions.
TREATMENT
Bates' prescription
- Get back to the basics: build the right partnerships, dealer networks and other infrastructure to deliver product and service quality.
- Change perceptions 'from the bottom up' with civic, community and environmental initiatives (this has been their approach in the American market, and there should be an opportunity to transfer learning into China).
- Forget about advertising for now. Get smarter, take the budget and use it to get other people talking about the good things Toyota is doing.
Lau's remedy
- Use provenance to differentiate and command the premium that functional superiority enjoys.
- Have a definite portfolio and communication strategy in place. Models must feed into a larger brand benefit beyond Japanese quality.
- Segment the potential base on more than just functional characteristics.
- It is crucial to have a strong customer satisfaction and CRM strategy to create brand advocates among Toyota's existing base and its trade intermediaries.