Toyota Differentiation Strategy

Toyota Motor Corp. was the largest automaker in the world as of 2011, and a key component of the company's success was a product differentiation strategy that included introducing a highly efficient manufacturing model to increase the performance of its vehicles and offer car buyers increased value.

Background

Toyota was able to achieve a leadership position in the North American auto manufacturing market, surpassing General Motors and others, by focusing on continuously finding ways to reduce production costs. The company also optimized its processes to accelerate the various phases of production -- from initial design to production -- so that it could introduce new models faster than its competitors.

Toyota Production System

The Toyota Production System, introduced in the 1960s, became a model for vehicle manufacturing, though other automakers struggled to emulate the system. Based on the concepts of just-in-time production, the TPS built vehicles based on immediate market demands rather than in anticipation of future possible demands. This was designed to cut costs and eliminate waste.

Considerations

Another key part of Toyota's differentiation strategy is the fact that the company was able to produce vehicles for many different market segments and price ranges. In the sport utility vehicle class alone, Toyota developed the Land Cruiser, 4Runner, Rav4 and Sequoia, each tailored to different price ranges.

References

• "Strategic Management Theory: An Integrated Approach; Charles Hill and Gareth Jones; 2006.
• The Truth About Cars: Too Good To Be True: How Toyota's Success Caused Killer Decontenting; Edward Neidermeyer; January 2010.
• IndustryWeek: Learning From Toyota -- Again; February 2006.