A Study of the Flyer Advertising Affect When Utilizing TMS ...



A Study of the Flyer Advertising Affect When Utilizing TMS-S at Toyota

Kakuro Amasaka (Dr)

Aoyama Gakuin University

6-16-1,Chitosedai,Setagaya-ku,Tokyo 157,Japan,157-8572

Phone:+81 3 5384 3795, Fax:+81 3 5384 6500, kakuro_amasaka@ise.aoyama.ac.jp

Abstract

In this paper, the author is going to show an effective improvement in the mode of sales operations when the Toyota marketing system is approached by Science SQC. Innovating dealers' operations has strategic effects on automobile sales activities. Renovated Toyota Marketing System, TMS supported by Science SQC, is a next generation of TMS, called TMS-S. It will be a key to promoting New JIT. In this study, one example of TMS-S is presented. It is concerned with the effectiveness of flyer advertising contributing to automobile sales activities of dealers by way of the attraction of customers in Japan. The paper will show what Science SQC means and how it works to shape a new TMS-S, which leads to New JIT in Toyota.

Keywords： New JIT, Science SQC, TQM, TMS-S, Customer Science , Flyer advertising

1. Introduction

In recent years, the concept of JIT is getting more comprehensive at Toyota. It's going beyond a philosophy to streamline production operations to improve quality, cost and delivery. The author has worked on the development of New JIT. One principle the author has advocated for the development is to enhance TQM activities by linking three core-systems (Toyota Marketing System, Toyota Development System and Toyota Production System) for sustaining Toyota as an eternal supply system, under a new discipline of Customer Science with adoption Science SQC. One important aspect, the author is recognizing is sales activities. In this paper, the author is going to show an effective improvement in the mode of sales operations when the Toyota marketing system is approached by Science SQC. Innovating dealers' operations has strategic effects on automobile sales activities. Renovated Toyota Marketing Systems, TMS supported by Science SQC, is a next generation of TMS, called TMS-S. It will be a key to promoting New JIT. In this study, one example of TMS-S is presented. It is concerned with the effectiveness of flyer advertising contributing to automobile sales activities of dealers by way of the attraction of customers in Japan. The paper will show what Science SQC means and how it works to shape a new TMS-S, which leads to New JIT.

2. Significance of New JIT

The author[1] added new two major core-systems Toyota Development System and Toyota Marketing System to then Toyota core-system Toyota Production System called JIT (Just in Time) having worldwide high reputation as the Lean System. Fig.1 proposes the next generation management technology New JIT and briefly explains the New JIT quoting an actual study proof. Here is the significance of New JIT having three core-systems from the cooperative activity in an enterprise viewpoint. Here, let us consider the organizational way of proceeding with jobs under Japanese style management and the effect. Fig.1 illustrates a typical organization chart. As shown, there are a total of 13 departments; 5 departments are concerned with development and design (Product planning, Profile design, Engineering design, R&D and Evaluation by examination), 4 departments are engaged in production (Preparation for production, Production engineering, Manufacturing and Inspection) and 4 departments are related to sales and planning (Sales, Services, Market research and Product Management). Jobs are normally linked among multiple departments and they are requested to carry out timely and speedy QCD（Quality, Cost and Delivery）activities. In this sense, the whole company is consistently deploying Total Marketing [2]. How important it is that all departments are linked systematically and organizationally is described using a simple theory of probability. Table.1 lists the overall job reliability of all of the 13 departments. In Case 1, although the reliability of each department is as high as 99.9%, the total reliability of all 13 departments is lowered to 98.7%. Hence, 1.3% problems (non-reliable products) occur, resulting in inconveniences of customers (claims). When reliability drops as low as 95.0% as in Case 2, the total reliability drops drastically to 87.8%, causing 12.2% claims, which is a serious problem that cannot be overlooked either internally or externally. In Case 3, the reliability is 95%, making non-reliability 48.7%, resulting in a recall or a fatal problem. In this case, it may not only be a social problem, but also can cause the company to go bankrupt. In Case 4, reliability of 90.0% is too low, causing 74.6% problems and loss of customer confidence, that has been gained over many years. Even in Case 5 where reliability is extremely high at 99.99%, 0.12% problems still occur. If the nature of the problems seriously damages the customers, it cannot be said to be safe as production quantity increases. In Case 6, although reliability of 12 departments is as high as 99.99%, it will drop sharply to 50.01% if one department achieves a low reliability of 50% for any reason (careless mistake, missing evaluation, insufficient skill of new workers, etc.), resulting in a fatal situation as in Case 3. As it will be discussed later, extremely highly reliable jobs can be accomplished by completely accommodating the new quality management theory TQM-S by applying the Science SQC as the three core-system techniques (TMS-S, TDS-S and TPS-S) link each other[3]. This ensures to achieve higher management results, which is the significance of the New JIT.

3. TMS-S Required to New JIT

3.1 “Science SQC”Quality Control Principles Materializing Customer Science

To develop customer-oriented New JIT, all activities involving not only vehicle manufacturers but also parts and material producers are important. it is important to implement Customer Science as shown in Fig.2 so as to convert customer's language (implicit knowledge) into lingual knowledge, and then into correct engineering language (explicit knowledge). Authors [4]proposed as shown in Fig.3 "Science SQC" having four principles as a scientific method that serves as a common language for the three core-system (TMS-S, TDS-S and TPS-S) which forma the key to the organically linked New JIT shown in Fig.1.

This is a systematized new SQC application for creating technologies that seeks "general solutions" which can be generalized as "quality control principles" for the industry.

[pic]

3.2 Science SQC Applied, Next-Generation Toyota Marketing System TMS-S

The author [4] is already proposing the Toyota Marketing System TMS-S, which includes the four main axes contained in the key core-system New JIT, as shown in Fig.4.

(a) Gathering of customer information by

linking the sales, product planning, design, development and production and market creation activity under full use of the gathered information. (b) Strengthening of product competitiveness reflecting all factors to be contained in the product value(QCD, reliability and brand). (c) Firm establishment of Toyota Sales Marketing System containing the three factors (Shop appearance, Merchandise and Service) with the highest priority given to ties with customers (d) Practical company activities containing all three factors (customer satisfaction: CS, customer retention: CR and customer delight: CD) required for customer value improvement.

In order to verify the effectiveness of the proposed TMS-S, the author and others[5][6] have developed the Toyota Sales Marketing System (TSMS) that materialize the Customer Science by creating a model capable of specifying the high Toyota vehicle replacement ratio customers using the Science SQC. Utilizing the system, the Nets Chiba, a Toyota dealer in Chiba Pref. has successfully improved the customer retention ratio and new customer acquisition ratio. The system is now deployed to nationwide Toyota dealers [7]

4. Necessity of Automobile Sales Innovation by Applying TMS-S, Key for New JIT

4.1 Expect to and Function of TMS-S Directing to Customer Science

The full-scale marketing in Japan began when the father of quality control, Dr.W.E..Deming gave lectures (1950 and on)in Japan, making SQC (Statistical Quality Control) popular to the market research[8]. Although he attempted to make the business science permeated into the corporate management, it was developed mainly as the TQC (total quality control) mostly at manufacturers’ production activities partially due to the background in those days. Thus, the TQC and SQC have not adopted widely to sales and product planning compared to production, development and design, as a result, causing strain to the customer-oriented quality management. Reviewing the above, the quality control is recently transferred to the TQM (total quality management)[9]. The author[10] surveyed the situations of major Japanese enterprises in order to grasp problem areas in promotion of TQM, hoping rapid progress of the TQM activity in the future, to find that scientific marketing and system construction are still insufficient to sales and sales related organizations. Therefore, it is judged that scientific activities by sales and sales related departments should be promoted. The survey indicates the necessity also to the whole automobile industry including Toyota. As a result, the author[4][10] reached a conclusion that the core system should be used, consisting of three technologies where the Toyota Development System and Toyota Marketing System are added to the conventional core technology of Toyota Production System. Especially, establishing the TMS-S which applies the science SQC is expected as the key for promoting the new JIT. That is, when we closely watch the changing marketing environment of late, it is necessary for us to give more importance to have the intercourse of mind with customers and have the ‘business and sales innovation’ to correctly understand the characteristics of their linking and changes unbiased by the established concepts.

4.2 Publicity and Advertisement as Automobile Sales Promotion Activities

Dealers have been making various publicities and advertisements to give customers motivation to visit their shops for years under cooperation by the automobile manufacturer.

Fig.5 presents an imaged indication of the advertisement and publicity media relation that contributes to drawing customer traffic to the dealers. Area A represents advertisement using multimedia (such as internet, CD-ROM, etc.), Area B representing the direct advertisement (catalogs, Direct Hand, Direct Mail, telephone, etc.) and Area C, mass media (radio and TV broadcasting, newspapers, magazines, flyers, etc.).

As market creation activities, it is important, for developing strategies for business and sales, to quantitatively grasp the effect of advertisement and publicity, which are the principal methodology of promoting sale and order receiving.

As far as the author knows, there are few cases how these sales activities actually draw customers to dealers is studied in the positive scientific way[11]. Grasping, the effect of publicity and advertisement, which are the methods for creating the market and receiving orders, quantitatively at the actual workshop is essential for establishing the future sales strategy. The author believes that it will bring an innovative operation to dealers [6].

4.3 Science SQC Applied, Dynamics of Publicity and Advertisement Effect

While it is understood by experience that, among multi-media, the leaflet has a high customer gathering effect as shown in Fig. 5, however, it has not been analyzed quantitatively. Among the information dealers want to know for continuously increasing the customer gathering effect after launch of a new model are ① how many months is the new model introduction lasts, ② the best timing (day of the week) and volume for obtaining the best leaflet effect, ③ the ratio of hots who, among visitors, show interests in purchasing new cars, ④ how many percentages of hots actually purchase new cars and ⑤ difference between dealers. It is desired to know the actual on these causes and results. As far as the author knows, the factor and result analytical method has not been established for analyzing the PR/advertisement dynamic effect as the scale of market experiment for obtaining the information quantitatively and in time series is too big and not an easy work. Therefore, only a few reports on this subject relating to automobile marketing exist[12]. For this reason, the factor and result analysis will be conducted in the next chapter, using the science SQC, wishing that it will be of help to readers as a step for strengthening the database marketing and promoting the TQM-S.

５．Application

－A Demonstrative Study on the Effectiveness of Flyer Ad for the Automobile Sales[5]－

5.1. Sales Activities of Automobiles, Advertisement and Publicity

As market creation activities, it is important, for developing strategies for business and sales, to quantitatively grasp the effect of advertisement and publicity, which are the principal methodology of promoting sale and order receiving. This report demonstrates the effect of the “flyer ad. effect” ,“day of the week effect”, “new car effect” and others, which is accepted among the front liners of automobile sale as having high investment efficiency and resultant customer traffic by using Science SQC.

5.2 Association Diagram of Sales Activities and Advertisement and Publicity Media

[pic]

Fig.6 shows an association diagram of causal relation between the sale and order receiving activities (dealer visit( hot ( order placement) and the advertisement and publicity media. The diagram indicates that the dealer’s ad and publicity media (causal system:X1 to Xn) attracts customers’ interest for purchasing, promotes their visit to the dealer (result system:Y0) and chain reacts to their purchasing behavior(hot:Y1(order placement:Y2).

Table. 2 Comparison of Advertisement and

Publicity Media

| |Flyer |News |Televisi|Radio |… |

| |ad |paper |on | | |

|Information |○ |○△ |△ |× |… |

|capacity | | | | | |

|Information |○ |○△ |△ |× | |

|quality | | | | | |

|Frequency of |○△ |○△ |△ |○△ | |

|acquiring | | | | | |

|information | | | | | |

|Ease of |○ |○ |△ |△ | |

|acquiring | | | | | |

|information | | | | | |

|Residual effect |○ |○ |△ |× | |

| | | | | | |

|Total point |１７４ |１４４ |６０ |３０ |… |

　　　　　　(Note 1) DH: Direct Hand　　(Note 2) DM: Direct Mail

5.3 Importance of “Flyer Ad”

[pic]

Next, the importance of the factorial effect of ad and publicity will be comparatively evaluated on the basis of subjective criteria (evaluation point: median) of representative sales staff of Toyota group dealers A and B. Table.2 indicates the degree of effect of respective media that promotes customer to visit the dealers. From the table, the effect of “flyer ad” delivered together with papers is expected to be great, which agrees with the empirical knowledge (the rule of thumb) fostered through the years of sales activities.

5.4 Survey of the Effect of “Flyer Ad” and

Factorial Analysis

5.4.1 Survey on the “Chance of Purchasing” Car

Accordingly, to verify the topics in Section 4, customers’ “chance of purchasing” cars at the Toyota group’s representative dealers A and B was examined. Fig.7 shows that the effect of flyer ad has been great in having customers make up their mind to purchase a new car.

5.4.2 Factorial Analysis of the “Flyer Ad” Effect

(1) Content of the field survey

A field survey was conducted as follows by designating 6 sales offices of Toyota group’s dealer B located in the urban area. (1) Motivation of visiting the dealer’s sales office and the customer profile (age, vehicle type he desires to purchase, timing of purchasing, budget, etc.).were checked with the questionnaire conducted with the visitors, and (2)Analysis was made with the following approach on the basis of the result of the examination in time series of the state of distribution of the flyers (quantity, etc.) over nine months starting before and ending after the latest introduction of the a new car and the order receiving activities at the respective dealers (number of visitors ( number of hot customers ( number of car sold).

[pic]

(2) “Science SQC” approach

The core technique of “Science SQC”, “SQC Technical Methods” is used to objectify(modeling: explicit knowledge) the subjective evaluation (empirical knowledge: implicit knowledge) of the “flyer ad.” effect.

[pic]

Here, the “Science SQC” approach of Fig.8 is applied to make a factorial analysis on the effect of the flyer advertisement in the sequence of Step1 (survey) and Step2 (analysis). The author wishes to report on Step3 (demonstration)in the next opportunity.

(3)Analysis of customers’

motivation for visiting dealers

Fig.9 shows the imaged presentation of customers’ motivation for visiting the dealers, which was analyzed on the basis of Quantification Class III to objectify the subjective evaluation.

When we note the categorical quantities of the ad and publicity media such as the flyers, newspapers and magazines in the figure, we think that those customers visiting dealers after seeing the flyers will be in the period of replacing their old cars sooner or later, and they are looking for a “good buy” for the new car. With other media, comparatively younger male customers for example may visit the dealers upon seeing some new RVs featured in the magazines. These results coincide with the image offered by the ad and publicity media of Fig.6 and Table.2 and the results of their effect analyses. From this, we have been able to acquire useful knowledge for the future business and sales activities.

Fig.10 shows a bird’s eye view of the state of the number of visitors to the shop (Y0), the number of hot customers (Y1) and actual order received (Y2) in two months after the start of a new car sale within the total period of 9 months of the field survey. The figure gives the outline of the distribution effect ( ) of the “flyer ad.” Moreover, we can assume that the number of visitors (Y0) is the principal factor for the purchasing behavior (hot (Y1) to order placement (Y2)) from the multivariate association diagram covering the total survey period of 9 months in Fig.11.

(4) Analysis of sales activities in time series

[pic]

Now we discuss the relationship

[pic]

among the number of visitors, number of hot customers and the number of units sold in Fig.12. From the figure, we can understand that as the number of visitors (Y0) increases, the number of the hot (Y1) and the number of car sold (Y2) increase on a regression slope of the respective exponents a 1 and a 2.　　 Also we can confirm from the figure that the ratio of the number of unit sold is about one-half of the number of hot customers. Further we can assume from the figure that ③ because of large dispersion in the data from the regression line, there is considerable dispersion in the ratios of the numbers of hot customers and units sold to the number of visitors for respective sales offices. In this connection a survey and

[pic]

analysis were made to find whether these dispersion factors in data are dependent on the characteristics of each sales office. Representative 6 sales offices were selected from dealer B and analyzed the transition of the “flyer” distribution, the number of visitors to these sales offices, the number of the hots and the number of order received for each office as Fig.13 shows and summarized the analytical results. The figure indicates that there is a considerable difference in the exponent of order received among the sales offices. For example, when we

[pic]

compare the exponents of order received (η= umber of units ordered/number of the hot) between the Head Office sales office in the urban area and Maizuru Sales Office in the regional area, the figure shows that exponentηfor the Head Office is 0.48 and η for Maizuru sales office is 0.71. Although we do not discuss the subject here, we can obtain a new activity guideline for formulating a new sales strategy by grasping the dispersion among the sales offices on the basis of such analysis.

(5) “Flyer effect”, “Day of the week

effect”, and “New car effect”

[pic]

For the current factorial analysis of the survey data in time series, we used the quantification class I because of the object period for analysis being too short. Fig.14 shows the “flyer effect”, the “day of the week effect”, and the “new car effect” that contribute to the number of visitors (Y0) to the sales office. Confining the discussion to the current range of investigation, we can state the following: ① From (1) in the figure, the more the number of flyers distributed, the more customers visit the dealer. ② From (2) in the figure, effect is greater on Saturdays and Sundays while the number of visitors are more or less constant on the weekdays. ③ From (3) in the figure, the “new car effect” lasted for two months in the current analysis including the starting month of the sale. The effect has converged in the period from three to five months after the start of the new car sales.

６. Conclusion and The Future Development of the Researches

(1) On the basis of these knowledge, it is necessary to carry on a demonstrative studies (Fig.3:

Step 3:Demonstration) by grasping the saturation point of flyer input (limit number of flyers), timing (day of the week for distribution), design of the flyer ad (texture of the flyer and impact) and the location and scale of dealer to increase the effect of the flyer ad efficiently. In addition, we intend to carry on a new demonstrative study on the effect of the similar mass media of “TV advertisement, etc” and the multimedia (internet, etc) to apply them.

(2)In this study, the importance of the Science SQC applied Toyota Marketing System TMS-S is emphasized as well as expectation to and function of the system for sure accomplishment of the New JIT, from the Customer Science viewpoint.

References

[1]Amasaka,K. “New JIT, A New Principle for Management Technology 21C-Proposal and

Demonstration of “TQM-S” in Toyota-“,Proc. of Ⅰ World Conference on Production and Operations

Management, Sevilla, Spain (August 31,2000),pp.15-27.(Plenary Session).

[2]Amasaka,K. “Management Technology and Partnering”, (in Japanese) JIMA, Memorial Symposium,

Osaka Industrial College (November 19,1999)pp.1-8. (Plenary Session)

[3]K.Amasaka and S.Osaki. “The Promotion of New Statistical Quality Control Internal Education in

Toyota Motor ”, European Journal of Engineering Education, Vol.24,No.3,(1999),pp.259-276.

[4]Amasaka,K. ““TQM-S”,A New Principle for TQM Activities”, Proc.ICPR-15,Thailand, Bangkok ,

(August 3,2000),pp.1-6.

[5]Amasaka,K et al. “The Development of Marketing SQC for Dealers’ sales Operating Systems for the

Bond between Customers and Dealers, (in Japanese )JSQC, The 58th Technical Conferencs,pp.155-158

[6]Amasaka,K. “Proposal of Marketing SQC to Revolutionize Dealers’ Sales Activities”, ICPR-16,

, Prague, Czech Republic,(July 30-August 3,2001).(Proceeding.)

[7] Nikkei Business. “Renovation of Shop, Product and Selling Method”,(in Japanese) March 15,1999.

[8]Kaneko,Y. “Present Marketing Research”, (in Japanese) Souseisha,1998, pp.46-49.

[9]TQM Committee. “Total ‘Quality’ Management in 21st Century TQM”, (in Japanese) NikkaGiren,1998.

[10]Amasaka,K. “The TQM Responsibilities for Industrial Management in Japan”,(in Japanese) JSPM,

The 10th Anual Technical Conference,(September 4,1999）,pp.48‐54. (Plenary Session)

[11]Kubomura,R & Murata,S. “Theory of PR”, (in Japanese) Yuuhikaku,1969.

[12]Tauchi, K. “Marketing Information System”, (in Japanese) Nikkei Newspaper,1977.

-----------------------

on Jan.６,XXXX

Fig. 9 Analysis of Motivations to visit Dealers（Quantification

ClassⅢ Scatter Diagram of the Category Quantities）

Fig.10 Example of the Records of Sales Activities

お

Fig. 8 Factorial Analysis ｏｆ the Effect of ゛Flyer Ad"

Fig. 7 Survey on the “Chance of Purchasing”

Rating

Fig. 6 Relational Diagram between Sales

Activities and Advertisement and Publicity

[pic]

◎ ： ５points

○ ： ４points

○△ ： ３points

△ ： ２points

× ： １point

×× ： ０point

Fig. 11

・Case １ : 99.9％／department

→ 0.999１３＝ 0.987（１.３％ problems）

・Case ２ : 99.0％／department

→ 0.990１３＝ 0.878 （12.2％ problems）

・Case ３ : 95.0％／department

→ 0.950１３＝ 0.513 （48.7％ problems）

・Case 4 : 90.0％／department

→ 0.900１３＝ 0.254 （74.6％ problems）

・Case ５ : 99.99％／department

→ 0.9999１３＝ 99.88％（ 0.12％ problems）

・ Case ６: When 12 departments are 99.99%

but 1 department is 50.0%:

→ 0.999１２×0.500＝0.4999

（50.01％ problems）

Table. 1 Job Reliability of 13 Departments [２]

[pic]

Fig. 3 Schematic Drawing of “Science SQC”

Lingual Knowledge

[pic]

Fig.13

Fig.1 New JIT, A New Principle so called “TQM-S” in Toyota

sales

Fig. 4 Schematic Drawing of “TMS-S”

Fig.2 Schematic Drawing of Customer Science

Fig. 5 Developing Images of Motivation to Visit Dealers

Jan. XXXX

Feb. XXXX

ａ1

B

（１）

（２）

）

（３）

Fig.14

Science

Customer Science Activities

ａ２

Fig.１２

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