Case Study: The Toyota Prius
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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 couldnt 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
dont 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 didnt 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
Toyotas 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:
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 couldnt
fold down, and it wasnt 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:
/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”.