This is how Toyota did this strategy in the market place, it was the year 1998 Toyota
wanted to come into the Indian market. When they wanted to come into the Indian
market, they were looking for a partner from the Indians side. It was also the time when
Kirloskar was looking for new opportunities to tie up, the result Toyota picked up
Kirloskar to enter India.
The statement given by the president of the Toyota motor company at that point of time
was Kirloskar is the gateway to India for Toyota. So, this was the year 1998, then what
(Refer Slide Time: 02:45)
From 2001 to 2004 Toyota came up with a wonderful car, not really a car, it is an SUV
that is the Toyota Qualis.
(Refer Slide Time: 03:12)
This Toyota Qualis which came out from Toyota was considered as the most economical
multi utility vehicle in India. It is actually Toyota put this Toyota Qualis as an MUV in
the Indian market in 2001. At that point of time there were so many vehicles, which were
being manufactured by a other well-known manufacturers, which was also in the same
category of this MUV like Toyota Qualis.
In other words, these vehicles were competitors to Toyota Qualis, which were these
vehicles? These vehicles were TATA Sumo manufactured by Tata’s, Mahindra Bolero
by Mahindra’s, then Mahindra Aramada again by Mahindra’s, then the Tempo Trax by
Bajaj. All these are well-known names; you have four well known Indian auto
manufacturers, who have got entrenched in the Indian market, and that was the time
when Toyota came and introduced this Toyota Qualis.
Toyota Qualis had in effect very stiff competition from these four, that is the TATA
Sumo, Mahindra Bolero, Mahindra Aramada, and then the Tempo Trax, this was the year
2001 when this happened.
(Refer Slide Time: 05:16)
Look at what happened next. 2003 to 2004 Toyota was considered as the most
economical executive multi vehicle in India. Toyota Qualis got a face lift from Toyota
and they made it to look like a good executive MUV, which many of the Indian
executives would be happy to travel in. The Indian Automobile Association looked at
this vehicle Toyota Qualis and said this is the most economical executive, multi vehicle,
multi utility vehicle in India, this was 2003.
At that point of time some more competitors came to Toyotas Qualis, that is the facelift
at Toyota Qualis, which where these competitors? The first competitor was Chevrolet
Tavera, this is from GM. The second one from Mahindra Bolero Sports from Mahindra,
then you had Mahindra Scorpio again from Mahindra, then you had TATA Sumo Victa.
It was again a facelift given to TATA Sumo to make it more appealing to executives who
would like to travel the TATA Sumo. So, they called it the TATA Sumo Victa. Toyota
Qualis the facelift given to Toyota Qualis to make it become the most economical
executive multi vehicle in India had very stiff competition again from well established
players kindly note this. Chevrolet Tavera from the GM, then Mahindra Bolero Sports,
then Mahindra Scorpio from Mahindra’s, then TATA Sumo Victa from TATAs.
The first Toyota vehicle if you see, it had the competition from TATA Sumo, Mahindra
Bolero, Mahindra Aramada, Tempo Trax. Now, within a span of 2 years what is
happening, Toyota Qualis has got a facelift and how does it look like? If you see Toyota
Qualis facelift has changed the competitive scenario.
Instead of the four we saw the facelift at Qualis has got competition from Chevrolet
Tavera, Mahindra Bolero Sports, then Mahindra Scorpio, then TATA Sumo Victa. You
see the Tempo Trax of Bajaj not in this picture now instead you have the Chevrolet
(Refer Slide Time: 08:58)
What happens in by the end of 2004? According to the auto India Toyota Qualis is rated
as the most reliable passenger carrier in India. Look at this extraordinary performance of
Toyota, just within 3 years auto India rates Toyota Qualis as the most reliable passenger
carrier in India, when there was such a terrific competition, from such established
players, including a foreign player like GM.
The result is Toyota got a major success in subsiding almost all the top Indian MUV
manufacturers. Just within a span of 3 years Toyota Company got a major success, in
subsiding almost all the top Indian MUV manufacturers, and it was considered as the
best vehicle most reliable passenger carrier within a span of 3 years, this is an
extraordinary performance by Toyota.
(Refer Slide Time: 10:29)
Look at what happened afterwards, this is something very interesting. Now, the people
who were giving competition that is the manufacturers who were giving competition to
Toyota Qualis? They were not prepared to look back; they said we will compete with the
facelift at Toyota Qualis. What happened? To compete with the Toyota Qualis all the
major MUV manufacturers in India diverted their funds in development of new
generation SUVs and MUVs.
Look at this terrific amount of money pumped in by these major manufacturers from the
house of TATAs, from the house of Mahindra’s, and then from the house of GM to take
on Toyota, Toyota in the Indian market. Now, what does Toyota do now, this is what
strategy can do to a company kindly see this next one.
(Refer Slide Time: 11:54)
And, now came the real chance for Toyota to knock out everybody in this game just by
one smart move. What is this one smart move which Toyota did? You will be taken
aback by the way Toyota played this game.
(Refer Slide Time: 12:24)
What did it do it said 5th January 2005? There was an insertion in the Economic Times,
what was the insertion in the Economic Times? Toyota to phase out Qualis; such a
wonderfully performing vehicle in the Indian auto market, which has almost swamped
competition from major auto manufacturers in the country having virtually no
competition, that being the case Toyota announces in 2005, that it wants to phase out
Qualis unbelievable what is the explanation given?
Qualis is Toyota’s taxi segment vehicle and it is not reflecting our brand as a passenger
vehicles manufacturer. Qualis is Toyota’s taxi segment vehicle and it is not reflecting our
brand as a leading passenger vehicles manufacturer. The reason given by Toyota to
phase out Qualis, the statement attributed to the vice president of Toyota Kirloskar
Toyota entered India through this venture with Kirloskars, it is called TKML. And this
TKML manufactures Toyota’s in it is sophisticated plant near Bangalore in a place called
Bidadi. And, this is where from where the Qualis use got rolled out in the country. And,
it became such a huge success after enjoying this success Qualis all of a sudden says, on
5th January 2005 that it wants to phase out Qualis ok.
The reason given is Toyota Qualis is a taxi segment vehicle and it is not reflecting the
brand of Toyota as a leading vehicle, passenger vehicles manufacturer.
(Refer Slide Time: 15:25)
What happens next? Toyota says, we will launch Innova as a replacement to Qualis look
at this. First they come out with Qualis; Qualis establishes itself within 3 years swamps
competition, then after Qualis swamps competition Toyota announces that it is going to
discontinue manufacturing Qualis. What is this called? This is called product
This is called product cannibalization; this was also done by Microsoft. When Windows
95 was very popular all of a sudden Microsoft announced that it is going to replace
Windows 95 with Windows 98, many were taken a back. Why should Windows 95 be
replaced? When windows is doing very well and 95 is doing well and it has almost
captured the entire market.
The reason given by the chairman of Microsoft at that point of time that is bill gates was
if we do not cannibalize this product ourselves, it is very possible that is somebody else
will do it. That is somebody else meaning a competitor to Microsoft will ensure that this
Before, it they can do it Microsoft said, we will cannibalize the product ourselves. This is
where sometimes when we go through when I went through the first lectures of
marketing; you should be prepared to give up sentiment in the market place take the 2
cars, which were then there in the 70s and the 80s in India. You had a fiat or a Premier
Padmini very sleek vehicle and you had the Ambassador.
Ambassador was a time trusted car in the Indian road conditions. Many of the Indians of
that period used to boast of having an Ambassador. Father would give his son, the
Ambassador car from the son, it would go to his son, that is from father to son, to
grandson and the grandson also will be very happy to say this car belong to my
grandfather, and I am running it now, contrast it with the auto scenario now. Even in the
wildest of once dreams no one ever thought that Indian’s would be replacing their cars in
3 to 5 years.
You have a scenario in the Indian market, where an Indian consumer is prepared to look
at a new car once in 5 years and sometimes less than 5 years also once in 3 years. What
does this tell you? This tells you that the purchasing power of the Indian consumer has
enormously increased in this particular segment to own a car in the 70s and the 80s was
considered a luxury.
And, if you drove the car in the 70s and the 80s, you would see the traffic police person
who at that point of time used to wear a half pant and a shirt that was his uniform. He
would invariably salute most of the people who used these cars in the Indian market,
because they were it was considered to be a particular status symbol to own a car, in the
70 in the 60s, 70s and 80s.
From the mid-80s after the entry of Marathi this scenario started changing. You had
foreign players also coming into the Indian market like the Toyota, and in 3 years Toyota
comes in gives the taste of what it is it can offer the Indian market by it is Qualis, and
within 3 years it says that we are going to replace Qualis with Innova.
Even to this day you may see many consumers Indian consumers still having the Toyota
Qualis, still having good words to say about Qualis even to this day that is in 2019 also.
Toyota says that in 2005 we want to launch Innova as a replacement to Qualis, why?
(Refer Slide Time: 22:00)
This is one smart move by Toyota why did it do? So many 4 top Indian and SUV
manufacturers put lot of money to take on Toyota Qualis. To come with an alternative
for Toyota Qualis in the Indian market and now Toyota announces, that it is
cannibalizing Qualis and now comes out says that we want to launch Innova. What is
this called in the marketing terminology?
It is one smart strategic move by Toyota, what is a result 4 top Indian SUV and MUV
manufacturers their bags are packed. So, much of money invested all gone why and how
if you look at it?
(Refer Slide Time: 23:07)
What does Toyota do? It comes with this new product Innova prices it at this the same
level as that of Qualis at that point of time. Now, Innovas price has increased manifold
number of a manifold in 2019 you I was told that Innova cost about 23 lakhs.
When introduced in 2005 the price of Innova was the same as that of Qualis, the boots
space was also as that of Qualis, but now look at the other two things, the styling the
looks just amazing, what is the type of comfort that has that was likely to get from this
Innova for the Indian consumer, it was double that of the Qualis.
(Refer Slide Time: 24:12)
If you looked at some of the features of Toyota Innova, it was a totally new concept of
interiors, it was a revolution in utility, it was a revolution in utility. We had never seen
that is the Indian consumer had never seen a cars interior like this till Innova came up
with this interior, that was in the year 2005. Look at the type of interiors which Toyota
gave to the Indian consumer in 2005.
(Refer Slide Time: 24:59)
Totally new concept revolution in utility, for the first time ever an Indian car with a rare
sonar system was given by Toyota. This could sense what is at the back of the car that is
what is at the back of your car? If your reversing whether you are going to hit some
vehicle or some other object all these types of things would get beamed to you in the
driver seat through an (Refer Time: 25:37) which was unthinkable at that point of time.
(Refer Slide Time: 25:47)
(Refer Slide Time: 23:49)
A rare sonar system, then what did Toyota announce. It just said this Innova is going to
be assembled in TKML that is the Toyota Kirloskar Motors Limited, in the Bangalore
plant. It made one more statement, what is that statement? It said Innova is neither a
SUV, nor a MUV, it is not a SUV. It is not an MUV; it is more or less like an MPV.
What is this MPV? Toyota called it has the multi-purpose vehicle, if you want to have
passenger look at it has a passenger vehicle yes fine. If you want to look at it has a big
vehicle where you can go from intercity very comfortably yes that could also be done
with a lot of boot space. So, it said it is more or less like an MPV, then what did it say, it
said a few more things, which almost shook the Indian automobile market.
It said Qualis booking will be stopped, in almost all showrooms of Toyota Kirloskar
motors limited in India on the 5th of January 2005; came with a wonderful car that
replaced Toyota Qualis within 3 years, it made an extraordinary mark in the Indian
market auto India considered it as the best passenger vehicle, then it said best executive
vehicle in fact, passenger executive vehicle then all of a sudden Toyota says that we are
discontinuing Toyota Qualis coming out with Innova.
And, then Toyota announces Innova booking will start in the first week of February
2005, TKML to roll out first Innova in the second week of February 2005.
(Refer Slide Time: 28:32)
Now, through this move what did Toyota give? It had started an Indian a new revolution
in India and we the Indian’s have absolutely no solution for it right, now even today if
you see there is no really no competition for Innova.
(Refer Slide Time: 29:51)
If you look at through this move what did Toyota prove again? Toyota proved that they
are the worlds rank 1 passenger vehicles manufacturer, there is virtually no competition
for them from anyone you name it, whether it is the ford, or whether it is the GM, or
whether it is the TATA’s they said they cannot compete with us.
Now, if you look at Innova in a different aspect, what is it actually? Innova is an
altogether different styled vehicle take the other competitors, whether it is the GM India,
or the Mahindra’s, or that or the TATA Sumo Victa, that is from the TATA motors, why
it is a different styled vehicle?
(Refer Slide Time: 30:27)
This vehicle if you see look at this amazing feature of the Toyota Innova at that point of
time. No Indian vehicle was looking like this look at this care up of Innova.
(Refer Slide Time: 30:44)
Used the same prices that of Qualis used the same boots phase that of Qualis with a
amazing styling and amazing looks.
(Refer Slide Time: 30:58)
What did it bring out to you? It came out to be a Revolution in the Indian Passenger
Vehicles Market. The Indian passenger never thought that he can get a vehicle like this
in the passenger vehicles market. The customer has no alternative to this kind of vehicle
no competition in the Indian market.
(Refer Slide Time: 31:51)
Whether it is revolution in utility or the concept of the interiors, then for the first time
you had in the Indian market a decent and smart motion mechanism, that is you do not
have to use the handle to bring down the window panes, whether it is in the front
window glass panes in the front or the back, you started getting this smart motion
mechanisms hat is a switches, which can adjust the you can adjust the height of your
glass panes through this bring it up go down with a very smart move.
Never in the Indian market the Indian consumer knew that, this type of movement was
possible, then you had this rear sonar system, then you had Toyota announcing that all
this will be done through their TKML Plant in Bangalore. And, this TKML plant to
produce this Toyota’s, to produce this Innovas from Toyota and Toyota coming out with
one more statements saying that Innova is neither a SUV nor a MUV it is more or less
like an MP like a MPV that is the multi-purpose vehicle.
(Refer Slide Time: 33:49)
And, then says that it will launch the Innova on in the second week of Feb 2005. What
does all these tell you it tells you, why you have to be smart in the market place. Toyota
is a fresh entrant into the Indian automotive scenario kindly note that. It entered the
Indian automotive scenario through the well-known brand umbrella of Kirloskars.
For Kirloskars, it was also a proud moment to associate with Toyota and come out with
this Toyota vehicle in the Indian market. And, all that manufacturing was taking place in
the Bangalore plant. This was called Toyota Kirloskar TKML plant in Bidadi.
And, even to this day the TKML plant is a very sophisticated plant automotive
manufacturing plant in India. Highly known for it is very efficient production lines and
all this was possible, because of this extraordinary meticulousness, which was exhibited
by Toyota to capture the Indian market. Doing this in the phase of very stiff competition
by GM by Mahindra’s and TATA’s speaks volumes about Toyota’s ability to with stand
competition in the Indian market.
Through this one smart move Toyota had created a new revolution in India. And, when it
created this revolution at that point of time Indian’s really had no answer, or no solution,
no competition for this vehicle. In one smart move, what did Toyota do it trounce
competition, it trounced competition from such established players like, GM Mahindra’s,
Bajaj and TATAT’s.
It was just unthinkable; if you really see right now you find even to this day Toyota
Innova has virtually has got no competition. We have got other entrants into the market
also we have got different vehicles some of them are saying that they also sport the same
feature as that of the Innova, but still Innova stands very tall in the Indian market. This is
how if you look at it for the customer, it was a delight the Indian customer, it was a
(Refer Slide Time: 38:07)
He never thought that he would get exposed to this type of vehicle in the Indian market.
(Refer Slide Time: 38:13)
(Refer Slide Time: 38:15)
This type of vehicle in the Indian market, it was grabbed by the Indian consumer.
(Refer Slide Time: 38:24)
Again, it turned out to be a great success for Toyota. If you really look at how Indian
market has reacted to this vehicle. You just wonder how your strategic moves.
Especially, the marketing strategic moves can create a ripple effect, this is called the
ripple effect, you introduce a very good product like the Qualis and then before your
competitors your competitors come to take you on come out with make the R and D
energize their R and D wings to come out with a product, which can be a stiff competitor
Then you cannibalize the Qualis itself, come out with a new launch say it is Innova and
you when you have this Innova you come out with the new features, which the Indian
consumer at that point of time had never thought would be he could have in his vehicle.
Never did he think that you could have this wonderful interiors, never did he think that
he could have this decent and smart motion mechanisms.
And, that wonderful styling which it came out with all that resulted in Qualis, which was
cannibalized by Toyota replaced with Innova been lacked up by the Indian consumer
market, that is it was slapped up with such extraordinary speed. Toyota when it
introduced this Innova pricing at the same level that of the Qualis around 6 lakhs.
If you now think of the pricing of Innova it has multiplied 4 times that is 400 percent
increase. And, still it is sales are at a very high level, even to this stay in the Indian
market what does this show for you. It shows how strategic marketing can be
extraordinarily effective in a competitive scenario?.
The present day Indian market is very competitive there is in fact, take the consumer
market like, your whether it is the vegetables market, or whether it is the consumer
perishables market, or it is the consumer durables market, you have terrific competition,
you have many outlet us, you have the Reliance, you have the Big Bazaars, you have the
Wal-Mart, you have the Flipkart, you have the Amazons now, all these players you have
entered into the Indian market.
When there is so, much of competition. What is the thing which they are trying to do?
Some of the later players like the Amazon they think that, it is still worth to have a
second bite of the apple that is what we discussed in the profit life cycle. You do not
have to be the first entrant in the market place.
Still the second bite of the apple would be more than enough, if you look at the booming
Indian market. Almost every player wants to have a slice of the cake. Because, he thinks
that it is a big chunk and in that big chunk even a small portion is fair enough, it is good
enough for him to such time. Wal-Mart thinks the same way, Amazon thinks the same
way, Flipkart also thinks the same way, you have the metros, you have the Big Bazaars.
If you really see all this are making the life of the small retailer very tough. As these
people are invading to his retail space also. Many times’, you wonder, whether this
retailer will continue to exist or will he disappear. Like your small stores where you used
to everyday go visit this small store ask for items from him and he would pick up those
items then give it to you.
And you find that your children are not going to that store instead they may be going to a
Big Bazaar, or some other the Reliance store, and bringing these items, or they may
sometimes, they may not even be going there they may be ordering online all this digital
marketing, which has come in and your items come and get delivered at your door step.
What does all this make? It makes competition when extremely critical component in the
present market scenario. The present market scenario has made competition extremely
critical and in order to survive in this type of a market, the play the market player have to
be on their toes always, they cannot afford to relax. If you see the Big Bazaars or the
reliance you find that every week they announce a different type of sale, they say there is
a Wednesday market.
For every festival they say there is a Diwali sale, there is a Dasara sale, all those types of
things and prices at a rock bottom. Many times’, people wonder whether you can sell the
product at this rock bottom price, how can be marketer make any profit if he sells at this
Whereas these, you may call it the semi wholesaler or the wholesalers, they are looking
at it from the volume marketing aspect. Sell large number of units of the same product,
suppose you sell at only one unit, you may not be making any profit. Suppose, you sell
large number of units the volume, you may still be able to get profits due to this volume.
This makes the life of the retailer that much harder. He has to compete with all these big
players and still survive in the market place. This is what the Indian market is in the
present day, whether it is the automotive market which was brought out by this Toyota
strategy or whether it is the consumer market, which is the amplified by all this players
like the Big Bazaars, the Metros, the Amazon, the Flipkart, the Wal-Mart you name it
you have so many other players also.
Almost all of them have entered the Indian market, why have all these players entered
the Indian market? They think that India could be a good place, where they can re
profits; it is because of the large demand base that can be created here for their products.
Recently if you see even the watches have undergone a terrific change earlier you had
the Titan you still have the Titan, earlier you had the HMTs, the Titan after it virtually
upset the HMTs.
Now, you have the Chinese players coming out with LED watches. This LED watches
look like a band on your wrist, on your hands and unless you touch it nobody will knew
that it is a watch. If you touch that watch time will get displayed, then what else is going
to come in this they have said your heart beat can also be, you can record, your heartbeat,
you can see how your heartbeat is really clicking through this watch itself.
It can be tagged on to your phone and all this is done at the tap of this particular screen, it
does not look like a screen, it looks like a very sleek band on your hand, you touch this
you get so many features. When you just wonder how all this is possible; this is what is
called innovation in the market place.
This innovation in the market place is the key to face competition this is what Toyota has
done through it is Innova. And, this is what the other companies are also doing like, the
latest watches which I said they call it the o led watches OLED watches.