Late Mover Advantage

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Case Study-5
Late mover advantage
Though a late mover, Toyota, the Japanese auto major wants to dispel the notion that the first mover enjoys an edge over the rivals who arrive late into a market. Toyota entered the Indian market through the JV route; the partner being the Bangalore based Kirlosker Electric Co., known as Toyota Kirloskar Motor (TKM), in the year 1998 at Bidadi, near Bangalore. To start with, TKM released its maiden offer-Qualis. Qualis virtually had no competition. Telco’s Sumo was not a multi-utility vehicle like Qualis, it was a mini-truck converted into a rugged all-purpose van. Toyota proved that it could offer better quality than its competitor. Backed by a carefully thought out advertising campaign that communicated Toyota’s formidable global reputation, Qualis overtook Tata Sumo within two years of launch. Failed strategy of late mover

But Toyota’s strategy of “Late Entry” in China back-fired, the largest growing auto market in the world. Toyota entered China in 2002 through a JV. Toyota ranks ninth in the market, far behind Volkswagen, General Motors, Hyundai and Honda. Late start was not the only problem and there were other lapses too. Toyota assumed that Chinese market would be similar to the Japanese market (SRC effect). But Chinese market, in reality, resembled the American Market. Sales personnel in Japan are paid salaries. They succeeded in building a loyal clientele for Toyota by providing first-class service to them. Most Japanese auto dealers sell a single brand, thereby ensuring their loyalty to it. Japan is a relatively a well-knit country with an ethnically homogenous population. Accordingly, Toyota used nationwide advertising to market its products in its home country. But China is different. Sales people are paid commissions and most dealers sell multiple brands. Obviously, loyalty plays little role in motivating either the sales staff or the dealers, who will ignore a slow selling product should a more profitable one...