Toyota, the Japanese auto maker reputed for its process innovation, as it developed the Lean Manufacturing and Just in Time manufacturing philosophies. Toyota is also reputed for Toyota Way, collective managerial values and business methods the company pioneered over years and the company is reputed for its quality manufacturing and production. In the Book Blue Ocean Strategy authored by W. Chan Kim and Renee Mauborgne, the authors quote Toyota Motors by referring to the company’s famous car Toyota Lexus, which was launched in the United States in the year 1989 at the price of the lower end Cadillac and Lincoln models but the car had features and quality of the high-end BMW and Mercedes and the motto Toyota Lexus was “Relentless Pursuit of Perfection”. The car was launched at a price of less than US$ 40,000 where as both BMW and Mercedes were priced far higher at above US$ 55,000 and US$63,000 respectively. The car became big hit for the company and it made a mark in the United States market as the company was a Japanese company facing tough competition from US auto giants General Motors and Ford Motors. Toyota created a new space of affordable luxury car market and it dominated this uncontested market and steadily built market share in tough US car market.
Toyota pursuit of Blue Ocean strategy resulted in the launch of Toyota Prius in 1997 which is a full hybrid electric mid-size hatchback, the first mass produced hybrid car and the car is rated as the cleanest car sold in the United States, which was launched in US in 2001. The company sold close to 4 million units till date and more than half of the sales come from the US market. The word Prius in Latin means "before" and the reason why Toyota choose this name was to highlight the fact that the company is more focused on environmental awareness and protection even before the whole auto industry started to focus on the environmental pollution caused by cars through the emissions. Toyota pioneered the concept of environmental friendly cars and also alternative fuel cars as the worldwide fossil fuel reserves like crude oil are exhausted and the cars need to have alternative fuel for running them. Toyota management had encouraged the development hybrid concept car that works on both gasoline and electricity and the current models also include the full electric car. Toyota Prius series created a new market segment of consumers who are highly environmental conscious and also gave an opportunity to all those consumers who want to focus on saving the environment as global warming due to carbon fuel emissions had become a major concern worldwide.
Product innovation focussed on environmental protection, quality, reliable brand image all resulted in building a highly loyal customer base that has been buying the Prius cars and made a top selling car in the hybrid segment particularly in United States. In terms of ERRC grid, Prius eliminated the harmful CO2 emissions, reduced the dependency on gasoline, raise the quality standard of hybrid cars in terms speed, design, performance and created a new market segment of hybrid and electric cars which all the major auto makers are now aggressively targeting. Toyota is focussing on making Prius even more effective and the company is constantly upgrading and launching new variants. Toyota Prius created a blue ocean market in highly contested red ocean of US Car market and is a classic example of Blue Ocean Strategy.