Brand Assessment of Toyota

Toyota is being criticized for being slow to respond to problems found in several popular car models. While slow service recovery will surely affect the brand, the president is making strides to assuage the concerns of its customers. As Jen Vollmert stated recently in GuestIQ, Toyota’s president has been “apologetic, sincere and forthcoming.” But is this enough? What can we learn from this?

The AP article notes that in Japan, brand loyalty to Toyota remains “relatively strong.” However, a Financial Times article from February 15th “Japan must re-examine brand awareness” states attention on Toyota brings to light an issue with the company’s business strategy: “overemphasis on production at the expense of the brand.” Japanese companies like Toyota look to foreign sales to improve profitability, which means increasing capital expenditure to increase capacity. This focus on exports caused the yen to appreciate, narrowing profit margins, which required more sales and thus a need for more capital expenditure. It became an ugly, self-consuming cycle. This need to produce ends up siphoning resources from other areas of the company, usually brand management.

Kyocera, a once suffering company, has started rebranding under the “One Company” campaign. After slashing capital expenditure, it has allocated money to brand management. Sony has also slashed capital expenditure, outsourced production, and began focusing on branding. So far, investors have faith in these changes.

Japan’s seemingly misguided strategies in the midst of financial turmoil offers a nice lesson. For your enterprise, whether it’s a restaurant, hotel, or a multi-national corporation, willy-nilly production must be tempered by sensible management of your brand. It’s been stressed a lot in GuestIQ that customer service doesn’t stop once you get the money. Toyota is now scrambling to save itself from destroying its brand image, and we can all see there must be safeguards in place to ensure the consumer is satisfied long after a transaction.

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