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.