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:

What is 7P ?

4P is not enough, because nowadays service or non-service products need to be treated in more complex ways and involve more men, more processes, and more creative ideas to be implemented nearby that product so that customers aware of it, would love to buy it, buy it often, and finally become loyal customers. Booms and Bitner added 3 additional mix to the Marketing Mix, that are: People, Process, and Physical Evidence. That 4P + 3 is called as 7P.
People: All men or women that are directly or indirectly involved in the consumption of a product and those people add significant value to the service or non-service product offering. The questions that needs to be addressed by marketers and other functions in the company are questions about who are the people that shall stand nearby the product to explain about the product's functionality? what kind of expertise that needs to be mastered by those people that stand nearby the product so that those people can influence customers to come by and finally become one of their loyal customers? is it needed to train those front people any additional knowledge or expertise? and etc.
Process: Mechanism by which the service or non-service products are consumed. The questions that are related with it are: how do customers find out the product? how they consume the product, are they consuming the product all at once or in few times (not all at once)? how frequent the product is consumed? and etc.
Physical Evidence: Nearby environment including all things in it that helps marketer or front salesman/salesgirl to communicate the product's features, to perform the service, and etc. Physical evidence is environment where the product meets potential and existing customers and that environment shall be able to relay the existing customer's satisfaction to potential customers so that they are willing to buy and consume the product. Layout and design of the environment add significant value to the perception of the customers. If the design of the nearby environment is luxurious then customers can start to perceive that products shown or sold there are expensive and exclusive products. If the cleanliness of an environment is preserved then customers can perceive that products that sold there are more clean and safe than products that sold in the vile traditional market.

What is 4P ?

4P that is popular as term Marketing Mix is a set of correlated that work together to achieve what marketer wants, that are the product is sold, customers need or want that product so much, the product sales is increase, and at the end the company enjoys profit. 4P consists of Product, Place, Promotion, and Price.
Product: What is the functionality of the product? What are the accessories of the product? How about if the product that customer bought is broken, is there any reparation and support? How is the package of the product? and many more questions that related with the attributes of the product that needs to be addressed by marketers together with other functions in the company.
Price: What kind of pricing strategy that will be used (skim, penetration, etc.)? Is there any discount for it? Is the discount for large volume buyers or for each retail buyers? Is the company going to suggest the retail price to the retailers or is the company giving retailers a chance to set the price themselves? and many more questions that related with how much the customers want to sacrifice to get the product are needs to be addressed by marketers together with other functions in the company such as finance department, operation department, and etc.
Place: What kind of distribution channels that suitable for the product? Is the product going to be sold in mass channels or in limited and private channels? How is the market coverage for each channels? Do the company needs to develop distribution centers that close to each private owned stores or other channels? and many more questions about where and how the product is placed nearby the customers that needs to be addressed by marketers and other functions in the company, e.g. distribution department.
Promotion: What kind of promotional strategy (push or pull) that suitable for the product? Do the product needs to be advertised in multimedia or just specific in a media? Do the product needs to be advertised for mass customers or just for specific targeted potential customers? Do the promotion for the product combined with IMC so that not only the product is sold but also the brand is becoming popular? and many more questions about how and when information about the product delivers to customers?