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Prius+Case+-+B,++Mar+2007 - Department of Management...

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1 Department of Management Science and Engineering Stanford University March 5, 2997 Business and Environmental Sustainability at Toyota Motor Corporation - B 1 The Evolution of Hybrid Marketing in the U.S. This case is the Prius marketing story, a successful program by Toyota U.S.A. that actualized the dream of the product Chief Engineer and made hybrid-electric a mainstream technology in the auto industry. Part A of this case study is the story of Prius product development and the strategy that its leader (Chief Engineer), Takeshi Uchiyamada, who is now a Toyota Executive Vice president, undertook to ensure that hybrid-electric technology would not end up as a fad and would successfully penetrate the market past early adopters and environmental enthusiasts. Uchiyamda had implemented a careful quality assurance program and had carried out a thorough economic analysis of Prius before its launch and firmly believed that it would become a mainstream product. 1 Professor Robert Carlson and Dr. Dariush Rafinejad of Stanford Management Science and Engineering Department prepared this case in collaboration with Celeste Migliore, National Manager Advanced Technology Vehicles, Toyota Motor Corporation in Torrance, California, and with generous support of Toyota Motors Corporation as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Copyright © 2007 by the Board of Trustees of the Leland Stanford Junior University.
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2 Prius Marketing Program The Prius marketing program in the U.S. started with its introduction in April 1999 and evolved through five phases in response to shifting consumer behavior. “We don’t create demand, we facilitate it”, said Celeste Migliore, National Manager for Advanced Technology Vehicles at Toyota U.S.A., who led the Hybrid Synergy Drive brand marketing launch as told in this case study. The auto industry in 1999-2000 timeframe when Prius entered the U.S. market was on track to set a new record. The market was dominated by trucks and Sport Utility Vehicles (SUV), gasoline prices were down to record low of $0.99/gallon, the Hummer H2 Concept debuted at Detroit Auto Show, the economy was strong and the dot-com implosion was yet to come. Hybrid was widely unknown in the market. The focus of public discussion, albeit limited to the environmentalists, was on electric vehicles and associated problems. The Honda Insight, a small two-seater proof-of-concept vehicle, had been launched in late 1999 with a low sales target. Toyota was a strong performer, but was known primarily for high quality cars and trucks and was not considered a technology leader! Phase 0: Prius Alpha-Testing The Prius launch started with a pre-launch program to “demo” the new technology and to receive vehicle performance feedback from customers through real-world testing.
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