Assignment 3: Case 7-2 “Carmakers Target Gen Y”

1. Explain the strategy behind Asian automakers targeting Gen Y. Asian automakers have sought out to target the Generation Y consumer for many reasons. They have found that high priced gas-guzzlers are not so popular anymore. Gas has not been at an affordable standstill for years. What does this mean to Asian automakers? They have the opportunity to target young US consumers that are looking for small reliable and fuel-efficient vehicles. Asian automakers understand that America is in a crunch so people are looking for more but for less.

Their aim is to introduce lines of vehicles that are not only fuel friendly but are pocket friendly as well. As stated by consumer affairs “There are 64 million Gen Y buyers coming into the marketplace,” stated by Jim Lentz, Toyota’s group vice president and general manager. “We know when they come to market to buy a vehicle, new or used, they will spend on average about $15,000. ” So Asia figured why not offer a brand new affordable vehicle with added perks for the same price as a used car? I myself feel that this thinking is genius in itself!

(Benton,2006) 2. Analyze the strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion. In any strategy you always think of the end result. I will start with the strategic planning of the Toyota Scion. I believe that we can all agree the main target was the younger generations. To offer a two door flashy coupe with a base price of $16,000 is a steal. The Scion was intended for the youth to draw them closer to the Toyota brand by an appealing young and hip vehicle.

With the Scion Toyota intents were to produce a vehicle that could be individualized and customizable and did not kill the pockets of either the youth or their family. They figured if they can introduce consumer to the Toyota family at a young age, they will lock them in to be a customer for life. The will know Toyota for its dependability and price and it will keep them in the family of Toyota for a lifetime. (Taylor III,2010) Honda has been around for ages many people know and love Honda for their reliability and inexpensive labor parts.

With the Honda Element there is a little bit of a different success story. The initial intent of creating the Honda Element was totally with America in mind. The Scion has already been a branded car in Japan; they just added some different and unique features and introduced it in the United States. Toyota saved money on engineering and manufacturing by building the Scion xB on a car already sold in Japan, called the Toyota bB. This shows you the difference in success because the Honda Element was made completely from scratch.

At the time this car was made for the younger generations as well, so many of the engineers where young their selves with unique and hip ideas in mind. The car was introduced back in 2002, it had a distinct look and was boxed shaped. It looked like it would have been an extreme hit and initially it was. However it has been reported that after the 2011 model year of the Honda Element was due to end manufacturing. The cause of ceasing manufacturing included mishaps by the manufacturer, competition both internal and external, and an inability to connect with target customers.

The Honda element had many different features all in one truck but still did not stand the test of time. (Taylor III,2010) The Element and the Scion are both success stories in their self. However even though Scion’s are still being produced, the Element success story lived out as a learning lesson for Honda for the duration of its life. Scion can still be seen being purchased and holding its image and reputation with the younger generation to this day. 3. Determine the rationale behind Toyota’s decision to limit the number of Scion vehicles available for sale.

Do you agree or disagree? Provide a rationale. It has been said that Toyota limited the number of Scion vehicles for sale to maintain its image. This was aimed in efforts of maintain it perceptive consumers. It put a limit on the amount of Scion that would be sold each year. They wanted to produce lower sales volumes that would not out weight its image that has already helped its reputation thus far. (Aziz,2006) I cannot say that I agree with the decision that Toyota made in this case. You have a car that is aim and targeted at a specific group yet there are restrictions.

If this car was intended to aim at a particular generation it would have no effect or bearing on the next. At least in my opinion it wouldn’t. I feel that a loyal consumer is going to be just that as long as they are receiving what they have been getting all along. In addition to an already reputable line in my opinion does not need limits because you are feeding the needs of a totally different consumer. If they are not putting limits on their loyal consumers that have already been set in stone, then why put it on the potential lifetime consumer that are could be building in the process?

4. Research current strategies that Ford and GM are using to cater to this particular market segment. There has been a lot of insight on the current strategies of Ford and GM as they pertain to benefit the Gen Y. It has been shown that fifty one percent of Gen Y buyers prefer Toyotas, so it has taken much change on Ford and GM part in order to stand the weather against all competition. Ford has been using a lot of tactics to attract the Gen Y. For instance with the 2011 Ford Fiesta, marketing at its best targeted toward the Gen Y.

A small affordable car that is fuel efficient does the trick every time. It offers cute appearances, fun color options, a quality interior fabric, fun driving dynamics, upscale tech and good fuel economy ratings for the Gen Y. With the push of “Going Green” the push of Hybrid has also helped with attracting Gen Y buyers. Fast selling cars, social media and marketing, and a go green car marketing plan and a 25% of the Ford one billion dollar ad spend on digital media and you have a formula for capturing Generation Y.

The Mustang and Ford F-150 as the top sellers amongst many of the Generation Y consumer buyers. (Gornbach,2012). General Motors is also cashing in as well. They understand how much of an impact that Gen Y has on the car buying business and is building accordingly to suit the needs. GM is the home to brands of Buick, Cadillac, and Chevrolet. Knowing that the driving cause with Gen Y buyers is fuel efficiency they are attracted to hybrids that are super loaded with technology.

General Motors meanwhile understands this and offers versions of the Chevrolet Malibu, Buick Lacrosse and Buick Regal sedans, all with small hybrid systems designed to boost fuel economy. (West,2012) References Kenneth W. Gornbach. (2010. January 9). Ford’s Success is Generation Y http://kgcdirect. squarespace. com/journal/2010/1/9/generation-y-likeford-the- mustang-is-why. html. Paul West. (2012. January 21) Gen Y auto buyer lean to hybrids http://www. latimes. com/business/money/la-fi-mo-gen-y-auto-sales-20120118,0,26 59409. story. Generation Y. (2008. January 1). Generation Y

http://www. generationy. com Joe Benton. (2006. February 22). Japan’s Big Three Take Aim at Gens X and Y http://www. consumeraffairs. com/news04/2006/02/big3_subcompacts. html. Keegan, W. J. , & Green, M. C. (2011). Global Marketing. Prentice Hall. P. 136-168. Alex Taylor III. (2010. December 10). Say good-bye to the Honda Element http://money. cnn. com/2010/12/10/autos/honda_element_rip. fortune/index. htm. Nick Aziz. (2006. November 13). Toyota to limit Scion production to maintain image http://www. leftlanenews. com/toyota-to-limit-scion-production-to-maintain-image. html.