Channel_and_Pricing

RUNNING HEAD: Channel and Pricing Strategies Channel and Pricing Strategies- TRANERGY University of Phoenix MKT/571 July 1st, 2010 Dr. Edward Wirth Channel and Pricing Strategies: TRANERGY Toyota presents TRANERGY, electronic devices with green energy that not only benefit the individual consumer, but it also improves the trucking and freight business, and public transportation. Toyota’s transportable energy device unlocks the limits of electronically-powered equipment. Considering the market necessity and status for the product, the internal and external competition, and the unstoppable brilliance of this device, Toyota, first, offers this product in Japan, the domestic market. Toyota is planning to expand the market into a second vertical market niche, Germany. Germany has been one of the leaders in innovation. They have created the first jet engine, atomic bombs and the first aircraft that had a machine gun that shot through the propeller blades. This paper includes information about the sustainability of the German and Japanese markets. This paper also presents channel strategies for domestic and the international market, pricing strategies and environmental factors. International Market: Justification Germany is known as the gateway to Europe. From Germany a person can travel by road to most of Europe by motor vehicle. Introducing the TRANENERGY in Germany will help the image in the country. The country’s older population has seen an increase driver’s license over the last ten years, with the younger population increasing even faster. The current trend in Germany, even their politics, has wanted to be the leader within the European community. Older people in Germany are more likely to have a license, to take more trips, and to do so more often as the driver of a car than older people just a decade ago; they are also less likely to use public transit. Even when the older population curtails their driving the younger generation will increase their trips to help out the older generation, Sandra Rosenbloom (2001). The TRANENERGY will launch Germany ahead of all the countries within Europe thus opening the market for Toyota with the TRANENERGY technology. The primary market for electric vehicles had been utilities and companies willing to pay higher prices to reduce their vehicle emissions, Parker, Paul.  (2001). The growth rate for vehicle operators in Germany and the surrounding countries will continue to grow, both in the older generation along with the young the need to have greener vehicles is the perfect place for Toyota to introduce the TRANENERGY. The love affair with automobiles in Europe will make it easier for Toyota to find dealers and service outlet for the new technology. Channel Strategy for Domestic and International Market Product Channeling After thoroughly considering the significant factors and characteristics of both primary and secondary vertical markets, Toyota must prepare an appropriate and effective channel strategy to introduce TRANERGY to the market. To steer TRANERGY into the energy choice of the future, Toyota must focus on the optimal channel strategy, intensity, and management to offer a comprehensive service for the target markets in Japan and Germany (Corstjens & Doyle, 1979). Channel Strategy Today’s market is focused on providing options, value, and convenience to the customer. Businesses have realized that customers cannot be directed, and with unlimited access to information and secondary options, businesses must cater to consumer demands (Rackham, 2000). Because the target markets consist of Toyota customers, businesses selling mobile media, and transportation services, the distribution channels must offer a wide variety of mediums, customer requirements, time demanded, and service styles for the consumers. For this reason, Toyota must exhaust all major distribution channels in both Japanese and German markets including close-knit business transactions, and wide-spread general marketing approach. Channel Intensity The intensity for channel distribution may be relatively mild considering there is no direct competition for TRANERGY. Without competition, the only threat to Toyota’s distribution channels is brand dilution, or product oversaturation (Kotler & Keller, 2007). If Toyota uses integrated channels over less-integrated channels, the product distribution tactics will easily transfer cross-culturally, provide a powerful front for TRANERGY, and simplify the channeling strategy for the corporation (McNaughton & Bell, 2001). Channel Management Most importantly, in both primary and secondary markets, Toyota must be adaptable and able to move with the demands of the consumers (BNET, 2010). In the beginning, Toyota has the luxury of creating one condensed channel for product distribution through car sales. As TRANERGY evolves and adapts to more products however, Toyota must reconsider adopting business partners and new channeling approaches to stabilize the wide-spread demand for the product. Pricing Strategies Case # 1 – Domestic Location – Japan In 2009 Japan population reached 128 million. Using the population data, Tranergy can estimate potential buyers within Japan. Tranergy cars percentage will be valuable in determining the average annual consumption and a measureable selling price of $5500. This price may be considered an expensive pecuniary; however, Tranergy must realistically visualize price and profits of the investment. At a selling price of $5500 the system starts at $4500, which includes the solar modules, electronics, and a 2.3 sealed lead acid battery. The 120 VAC plug-in is an additional $1000. So the customer base of 3,300,000 and an annual consumption of 40 percent of Tranergy drivers, 7.28%, Tranergy market potential is calculated at $228,228,000. Case #2 – International Location – Germany Threats and opportunities are equally justifiable. Yes, Tranergy may be a new player in the game but that does not determine a disqualification for the Toyota Company. This only symbolizes a significant role on behalf of Toyota to orchestrate diligence and effective market strategies to compete with existing and forthcoming competition. Currently, management anticipates threats because of increasing competition, transportation costs, pecuniary regulations enforced by the government, and demographic shifts in the market. Environmental factors- Government and Economic Japan and Germany both have environmental factors for domestic and international market that a business needs to evaluate before making any decisions on producing and marketing a product. The main focus should be on the government’s legal and the risk. The information on the economic factors including the rates of monetary issues affect on the company and the product. In June 1999 the enactment’ of the Environmental Impact Assessment Law in Japan took place and companies that work in Japan have to abide by the new restrictions when building or developing projects in Japan. This Law was enacted to protect Japan from companies taking advantage of their resources and not protecting the environment. Team B would need to consider these restriction in building a plant to create Tranergy or if there is any waste from creating or distributing the product. 2010 was when the last laws were enacted in Germany. The laws are very similar to Japan’s Laws. Team B’s Company needs to follow the strict guidelines and follow all needs for permits and restrictions when planning and proceeding with new projects to prevent large fines and being shut down. When looking at the risk and legal issues in Japan is evaluated the economic, political, and financial system need to be examines. Japan had the second largest economy in the world. Japan has several advanced manufacturing industries. The economy has been slow but is looking up recently with the demand for exports increasing. Germany has a very low level of risk in economic, political, and financial areas. Germany’s economy slowed in 2008 but is expected to be back to normal in 2011. The economy in Japan is recovering from the recession by having the bank’s loan out money to stimulate the economy and this process is being taken advantage of new businesses and businesses that are producing new products with in the country. Germany has the largest economy in Europe and the fourth in the world. Exports make up one- third of the market. Germany does not have many raw materials and had to import two-thirds of its energy. Environmental factors- Technology and Social/Demographics Toyota main market niche is Japan. Toyota has been engaged with social development in the last years. The social factors in Japan are not favorable, but Toyota is doing its best to reinforce social contribution. Toyota focused on environmental issues, safety, and education in global basis. Japan is also in the list of the world’s ten largest countries in population, which means there is market available. Table 1: World Ten largest countries in Population, 2010 |  |The World's Ten Largest Countries in Population |  | |  |  |  |  |  |  | |  |  |  |2010 |  |  |  | |Rank |Country |  |Population (millions) |  |Population Growth Rate % | |1 |China |  |1,338,280 |  |  |0.66% | |2 |India |  |1,182,572 |  |  |1.41% | |3 |United States |  |309,581 |  |  |0.98% | |4 |Indonesia |  |231,369 |  |  |1.14% | |5 |Brazil |  |193,126 |  |  |1.20% | |6 |Pakistan |  |169,843 |  |  |1.56% | |7 |Bangladesh |  |162,221 |  |  |1.29% | |8 |Nigeria |  |154,729 |  |  |2.00% | |9 |Russia |  |141,927 |  |  |-0.47% | |10 |Japan |  |127,360 |  |  |-0.19% | | Regarding technology, Japan is not only the domestic niche for the fuel devices, but it also introduces energy efficiency devices, purification of diesel engines and wireless power transmissions. Japan has been always the innovation and technology niche. Germany has an elaborate social system. Germany is a member in key European and other international organizations. Therefore, Toyota would like to merge into that niche. Germany contributes around 22 billion Euros, which makes it the single largest contributor. Additionally, Germany has the largest population of any EU member state, which represents the 8.8 percent of the total population. (Tatsachen Deutschland Ed, 2010). Regarding technology and innovation, together with Japan and the United States, Germany, with its 11,188 triad patent registrations, is among the world’s three most innovative countries. Conclusion Considering the market necessity and status for TRANERGY, Toyota, first, creates and offers this product in Japan and expands the market into a second vertical market niche, Germany. TRANERGY needs to be promoted in Germany because of the growth rate for vehicles operators and the love affair with automobiles in Europe. These two reasons will make Germany the appropriate vertical market niche. The channel strategies are the same for Japan and Germany because the team agrees that it will best to keep the channels homogeneous. On the other hand, the pricing strategies are heterogeneous because the social, economic and demographic factors are different in those two market niches. Japan has the second largest economy in the world, and it is listed in the world ten largest countries in population in 2010. The demand for exports is increasing in Japan and the growth expectation is also increasing. On the other hand, Germany has a very low level of risk in economic, political, and financial areas and it is expected to be back to normal in 2011. Additionally, Japan and Germany are among the world’s three most innovative countries. References BNET: CBS Business Network. (2010). Developing a Channel Strategy. Retrieved July 2nd, 2010 from http://www.bnet.com/2410-13237_23-168339.html Corstjens, M., & Doyle, P. (1979). Channel Optimization in Complex. Marketing Systems. Management Science, 25(10), 1014-1025. Retrieved July 2nd, 2010 from Business Source Complete database. Facts about Germany, 2010. Retrieved July 1st, 2010 from http://www.tatsachen-ueber-deutschland.de/en/content-home/facts-and-figures/population.html Library of Congress – Federal Research Division (April 2008). "Country Profile: Germany" (pdf). pp. 10. Retrieved June 30th, 2010 from http://lcweb2.loc.gov/frd/cs/profiles/Germany.pdf. McNaughton, R., & Bell, J. (2001). Channel Switching Between Domestic and Foreign Markets. Journal of International Marketing, 9(1), 24-39. Retrieved July 2nd from Business Source Complete database. Parker, Paul.  (2001). Environmental initiatives among Japanese automakers: new technology, EMS, recycling and lifecycle approaches. Environments, 29(3), 91-113.  Retrieved July 1, 2010, from CBCA Complete. (Document ID: 347831131). Rackham, N. (2000). Channel Strategy: The Next Generation. Sales & Marketing Management, 152(9), 40. Retrieved July 2nd from Master FILE Premier database. Sandra Rosenbloom.  (2001). Sustainability and automobility among the elderly: An international assessment. Transportation, 28(4), 375.  Retrieved July 1, 2010, from ABI/INFORM Global. (Document ID: 355897781).  Toyota. (2010). Driving Sustainable Mobility Forward. Retrieved from http://www.toyota.com/about/environment/innovation/ World Ten largest countries in Population, 2010. Retrieved July 1st, 2010 from United Nations Dpt. Of Economic and Social Affairs. June 2010