Case Study: The Toyota Prius

Case Study: The Toyota Prius

Lessons in marketing eco-friendly products

Rudi Halbright, Max Dunn

Managerial Marketing (SUS 6060)

March 3, 2010Introduction

"If you owned [a hybrid car], you could feel good about using less gasoline and being a

trendsetter, but you couldn't expect the fuel savings to make up for the thousands of

extra dollars that the hybrid cost. There was no financial reward for environmental

virtue." (Leonhardt, 2006)

This quote neatly presents the tradeoffs in marketing a green product like hybrid cars; often they

are not competitive by themselves in terms of prices or features. So how do you market a product

like this? Can you convince a lot of people to forgo features or pay more money in order to be

eco-friendly?

In general, the answer is no. While certain market segments will show a preference for ecofriendly products, those attributes alone are not enough for a product to gain widespread

acceptance (Power, 2008). 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

don't buy it because it is eco-friendly.

Thesis

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.

Background

Toyota didn't set out to create a hybrid car. Rather, then 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).

Initial Trial

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.First generation Prius NHW10

(Source: http://wikicars.org/en/Toyota_Prius)

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 couldn't

fold down, and it wasn't 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.

2000 Marketing Campaign

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 underpowered

and burdened with other limitations including rear seats that did not fold down (Taylor, 2006).

(Source: http://john1701a.com/prius

/scans/Prius-Ad_19.jpg)

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

launced 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 a more traditional form

using broadcast and print advertising and

continued to combine interactive, outdoor and

lifestyle marketing (Geller, 2000).Toyota also worked with MindArrow systems to replace printed brochures with interactive,

multimedia "eBrochures".