1. Organization : Toyota Motor
Corporation
Industry : Automobile
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Countries : USA
Excerpts
To download Toyota Prius: A Case
Hybrid Cars
in New Product Development case
study (Case Code: MKTG118) click Ferdinand Porsche manufactured the first hybrid-electric car in 1898. In
on the button below, and select the the 1960s a few attempts were made to manufacture hybrid cars by
applying turbine engines to the production of the vehicles. A turbine-
case from the list of available cases:
powered race car was introduced in 1967 with the turbine engines
powering the wheels through a mechanical transmission.
The need for cleaner and more
efficient vehicles led to the
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development of hybrid vehicles in the
For delivery in electronic format: Rs. 1970s. In 1970, a program called the
400; Federal Clean Car Incentive (FCCI) was
started by the US government. This
For delivery through courier (within
program led to the development of a
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hybrid prototype in 1972.
& Handling Charges
The program was scrapped in 1976 by
the Environmental Protection Agency
(EPA) of the US. In 1993, another
program called the Partnership for a
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New Generation of Vehicles (PNGV)
» Marketing Management Short Case was launched in the US. The partners
Studies in the program: Chrysler, Ford, GM,
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developed hybrid prototypes but
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never commercialized them...
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According to analysts, Toyota's success in both the local and global
» Case Studies by Company markets was based on its gaining a competitive advantage through
implementation of innovative and path-breaking ideas on its production
floors. Toyota had focused on learning from the very beginning.

2. Search At Toyota, knowledge sharing was
intertwined with its people-based
enterprise culture, referred to as the
Toyota Way. The five key principles
that summed up the Toyota Way
were: Challenge , Kaizen
Please note: (improvement), Genchi Genbutsu (go
and see), Respect and Teamwork.
This case study was compiled from published
sources, and is intended to be used as a
basis for class discussion. It is not intended The Toyota Way recognized
to illustrate either effective or ineffective employees as the company's strength
handling of a management situation. Nor is
it a primary information source. and attached great importance to
developing human abilities through
training, coaching and mentoring. The
principles of “Respect for People” and
“Continuous Improvement” were at
the core of the Toyota Way. Most
experts agree that the TPS system at
Toyota worked by combining its
explicit , implicit and tacit
knowledge...
The Original Prius
The original Prius was powered by the THS. The THS was an advanced
version of the EMS. THS is a power train that combined an internal
combustion engine and an electric motor. It was based on the
series/parallel hybrid system. It contained a power split mechanism that
divided and sent power through two passages...

3. The case focuses on the world's first mass
produced hybrid passenger car - Prius -
manufactured by the world's second largest
automaker Toyota Motors.
The case explains the new hybrid technology used
in the car.
It also looks for the reasons for the success of the
original Prius in the Japanese market and of the
subsequent models of the Prius launched in the
US and other markets.
The strategies for marketing the product in the US
are also analyzed.
Issues:

4. • History of hybrid vehicles.
• Working and usefulness of hybrid vehicles.
• The growing need for clean and green cars in the 21st century.
• The system Toyota put in place for the manufacture of the original Prius.
• The technology and other aspects and features of the original Prius and its subsequent versions.
• Toyota's marketing strategies in the US.
• The role of buzz marketing in the marketing of new and innovative products like the Prius.
Introduction
In December 1997, Toyota Motor Corporation
(Toyota) of Japan launched its hybrid vehicle
Prius in the Japanese market. This was one of the
first mass-produced hybrid vehicles in the world.
It used the Toyota Hybrid System (THS), which
combined an internal combustion engine fueled by
gasoline with an electric motor.
Prius achieved a balance between high mileage
and low emissions and was the upshot of the
company's initiative to produce environment-
friendly automobiles and its goal of
manufacturing the 'Ultimate Eco Car'(Refer
Exhibit I for the Ultimate Eco Car goal of
Toyota). The Prius generated a lot of enthusiasm
in the industry as it was both efficient and stylish.
It was also a safe car. The car conformed to Japanese regulations and standards pertaining to
environmental pollution. Having sold more than 100,000 units worldwide by 2002, it was the
best selling hybrid car model in the world.
The company introduced further refined models in
2000 and 2003. Toyota introduced Prius in the US
market in 2000. Before entering, Toyota
conducted a research study of the US market and
consumer preferences there. It developed various
strategies specifically for this market based on its
research findings. The price of the new improved
Prius was unchanged from that of the original
Prius.

5. These initiatives helped Prius to break
successfully into the tough US market even
though it was based on a new concept of a hybrid
car. In 2001, the Automotive Engineering
International3 recognized rius as the 'world's best
engineered
Introduction Contd...
By 2002, it was being sold in North America, Japan, Europe, Hong Kong, Australia and
Singapore. Analysts opined that the demand for hybrid cars would rise because of the unstable
oil prices and the growing need for environment friendly products.
Commenting on the future of green technologies
and on Prius in particular, Chris Giller of
Grist.org4 said, “In the marketplace, green
technologies and industries are among the fastest
growing and most innovative developments.
The Toyota Prius has defied every prediction to
become the must-have car. The organic food
business doubles every time you blink. Green
architecture is taking off.
Renewable energy, emissions trading,
environmentally-conscious investing: many of the
most exciting advances in environmental thinking
are happening in the private sector.”5
Background Note
Toyota
Toyota's history goes back to 1897, when Sakichi Toyoda (Sakichi) diversified into the textile
machinery business from his traditional family business of carpentry. He invented a power loom
in 1902 and founded the parent organization of Toyota, the Toyoda Group, in the same year. In
1926, Sakichi invented an automatic loom that stopped operating when a thread broke.
This prevented the manufacture of imperfect
cloth. (Calling attention to problems and
rectifying them at the earliest later became an
important part of the Toyota Production System
(TPS)). The same year, Sakichi formed the
Toyoda Automatic Loom Works (TALW) to
manufacture automatic looms.
Sakichi's son Kiichiro, an engineer from Tokyo

6. University, was more interested in automobiles
and engines than the family's textile business. In
1929, he traveled to the US and Europe to study
the manufacturing processes in car factories there.
After returning to Japan, he spent his time
studying car engines and experimenting with
better ways to manufacture them.
In the early 1930s, Kiichiro convinced his father to launch an automobile business and in 1933,
Sakichi established an automobile department within TALW. The first passenger car prototype
was developed in 1935. In 1936, Sakichi sold the patent rights of his automatic loom to a
company in England to raise money to set up a new automobile business...
Excerpts Contd...
The First Generation Prius
In 2000, Toyota introduced its first generation model of the Prius in the US, Europe and other markets.
This model was also called Prius NHW11 or Prius Classic. A few modifications were made to the vehicle
to meet vehicle standards for California, USA. Modifications were made to the engine by increasing the
horsepower from 58 to 72...
Marketing the First Generation Prius in the US
For Toyota, marketing the first generation Prius in the
US was a challenge. Commenting on the launch of
Prius in the US market, Senior Vice President and
General Manager of Toyota Motor Sales, Don Edmond
(Edmond) said, “Frankly, it was one of the biggest
crapshoots I've ever been involved in. Not because we
lacked confidence in the quality of the product. Or the
logic of the concept. Or the significance of this
breakthrough technology. The key was to convince
consumers in the U.S. that hybrid technology was
more than a science project...
The Second Generation Prius
Toyota began evaluating the popularity of its first generation Prius in the market soon after it was
launched. The evaluation was based on the price, performance and social aspects of the product as seen
by buyers and potential customers...
The Testing

7. The most important feature of the new Prius was its
enhanced safety. The company had worked toward
child safety and reducing the impact of collisions to a
remarkable degree...
Outlook
Toyota expected higher demand for the new Prius
than the earlier versions. Edmond said, “We are
targeting a sales volume of 36,000 for the first full
year. That's three times our sales target for Prius
(original) when it launched in the U.S.”...