Yesterday’s New York Times article, “Say ‘Hybrid’ and Many People Will Hear ‘Prius’” says it all. With sales topping 400,000 in the U.S. alone, Toyota has enjoyed great success with the Prius. Competing models like the Ford Focus, Honda Accord or Saturn Vue hybrids have not
found as much success as Prius. And recently Honda decided to discontinue production of its Accord hybrid after two years of lackluster sales in the U.S. Last year Toyota Prius sales represented 40% of all hybrid vehicles sold in the U.S. The distinguishing factor for Toyota…is what we call social response product development and Social Response Capitalism.Toyota built the Prius on an entirely new knowledge and technology platform. They did not try to fuse existing technology with a consumer need. Instead they gave the consumer something they were seeking all along – a new identity. In the sea of SUV’s, sport sedans, compact cars and trucks, Toyota found a consumer niche that was socially and environmentally motivated. They recognized, before their competitors, that a new kind of car needed to be born, and tailored its design over the past eight years to appeal to a new kind of consumer, the socially response consumer.
These social consumers might also be referred to as LOHAS Consumers or cultural creative’s, who represent “an estimated $208 billion U.S. marketplace for goods and services focused on health, the environment, social justice, personal development and sustainable living” (LOHAS). These consumers are beginning to influence new product innovation we term social response product development at the world’s largest corporations, like Toyota.
Toyota’s approach to social response product development is rewriting the textbook on innovation, product development and marketing. Toyota began the launch of Prius in 1999 with a loyal following of technology first adopters. After years of product refinement and consumer awareness Toyota has now moved the Prius toward a more mainstream consumer concerned about domestic and global energy and environmental issues like climate change or energy price volatility.
The July 4th New York Times article noted, “Unlike the original Prius buyers, who wanted to be first with its innovative technology, the latest owners are far more conscious of foreign oil dependence and global warming, said Doug Coleman, Toyota’s product manager for Prius…Consumer knowledge and consumer awareness is changing, Mr. Coleman said”.
Toyota’s grassroots approach to tweak the first generation and second generation Prius’ gave it a technology edge among competitors. Further, by focusing the Prius with a niche consumer initially Toyota was able to refine and redefine the vehicles performance and identity. Toyota proved with the Prius, that companies need to now compete on product price, quality, performance and social need. Toyota took eight years to get Prius to be the unique brand it is today where HYBRID is synonymous with PRIUS. Toyota found that it's not enough to simply offer a new or superior technology. The technology has to be multidimensional, it has to exceed the baseline technology on price and quality, and it has address true social needs in the marketplace. With Prius, Toyota created a new brand, a new social identity, like the way SUVs provided a certain identity for consumers in the mid-to-late 1990s.
In our view the future of global corporate competitiveness will be waged by the smartest, most savvy and strategic and most socially responsive firms. As social needs are defined in this new century by new requirements for clean air, water, transport, and energy – the most successful firms will be those, like Toyota, that answer public and social expectation through social response capitalism.
Mark C. Coleman
Senior Associate, AHC Group, Inc.
Mark@ahcgroup.com
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