Toyota Avanza in Indonesia

In 1997 Indonesia faced economy crisis that was causing salary decrease and a lot employees were fired. At that time inflation were flying high from 8.8% to 57.6% and people's income were decreasing from 6.6% to -37.8% so that car sales in Indonesia were decreasing from 400 thousands cars to only 75 thousands cars in a year.

Since 2000 the market for 4x2 low cars were increasing. In 2000 the market composition of 4x2 low cars in the market of 4x2 cars were 18.3%, while in 2005 were 37.4%. Unfortunately for Toyota because Toyota haven't had any products in 4x2 low cars market at that time. So, Toyota obviously wanted to launch its own 4x2 low car.
In the 4x2 low cars segment, the composition is: 70% private cars and 30% public transportation ("Angkutan Kota"), while the distribution of cars in that segment was: 35% in Jakarta, 29.4% in West Java, 14.2% in East Java, 7.4% in Sumatra, 1.7% in Borneo (Kalimantan), and 2.5% in Sulawesi. The 4x2 medium cars segment in 2000 its market share composition was 78% to total 4x2 cars segment, while in 2005 its market share composition was only 57% of total 4x2 cars segment. The distribution of 4x2 medium cars was 37.7% in Jakarta, 19.9% in West Java, 13.1% in East Java, 12% in Sumatra, 3.8% in Borneo (Kalimantan), and 4.3% in Sulawesi.

Before launching its new product (Avanza), Toyota analyzed competition on 4x2 low and 4x2 medium cars market. Toyota's 4x2 low product (Avanza) would face direct competitors like some city cars: Suzuki Karimun, KIA Visto, and Hyundai Atoz, and some MPVs: Suzuki Carry, Daihatsu Taruna, Hi-Jet, and T120. Market leader in 4x2 low cars segment at that time was Suzuki. The new 4x2 low car product from Toyota would also face indirect competitors like 4x2 medium cars because the price of those 4x2 medium cars were not too different nor too higher than 4x2 low cars' prices. The indirect competitors were Toyota Kijang, Mitsubishi Kuda, and Isuzu Panther, in which the market leader was Toyota. Let's see competition in the 4x2 markets that Avanza would enter that time in this price to engine chart.
Toyota then analyzed profile of 4x2 low cars' customers. 4x2 low cars were cars with engine approximately 1000cc to 1100cc and priced 70 to 100 millions Rupiahs. That cars' customers were demographically married, young age (average 32.5 years old), had high education, businessman or employees. They believed that relationship with others and happiness are important things and they love doing individual activities. The reasons behind what cars they bought were: economic (price, oil consumption per kilometers, maintenance costs, sell price), performances, capacities (total passengers and total weights the car could carry-this reason especially mentioned by MPV buyers) or style and size (mentioned by city cars customers), and credibility of cars' brand. Those customers wanted a stylish minivan car that offers safety features, capacity, features, and comfortable like Toyota Kijang but with cheaper costs and price.

After analyzing current situations, Toyota mapped potential customers segments (segmentation):
1. young businessman or employees (max 30 years old) that just married and interested in buying economic and stylish car
2. older businessman or employees (31 to 45 years old) that already married, had children, and interested in buying economic and larger capacity car as substitute for his/her current car
3. students that interested in stylish car with good performance.
Target segment for Avanza then decided to be >= 30 years old businessman or employees that married and interested in having economic, stylish, and large capacity car (segment 1 and 2). Toyota positioned Avanza as stylish and large capacity MPV 4x2 low which its qualities were equal to MPV 4x2 medium while its prices weren't different with city cars' prices. 4P or Marketing Mix that suggested for Avanza were:
1. Price: 75 to 95 millions Rupiahs
2. Place & Promo: first focused on Jabodetabek (Jakarta, Bogor, Depok, Tangerang, Bekasi) for few months (3 months), then distribution and promotion would spread on West Java and East Java.
3. Product: