“Carmakers Target Gen Y” Case Study

Explain the strategy behind Asian automakers targeting Gen Y The Asian automakers employed three criteria of target market strategy for capturing the generation Y market. The three criteria are Standardized Global Marketing, Concentrated Global Marketing, and Differentiated Global Marketing. The first, standardized global marketing focuses on mass marketing in a single country. Their decision to target the generation Y in the American market is their implementation of Standardized Global marketing.

The Asian automakers also saw that due to the Japanese restrictions on the number of children a family can have, the number of Generation Y consumers in the Asian market would be low. In response to this analogy, their best efforts are to focus on a target marketing strategy for the generation Y consumers of the American market. In addition to their market analysis, studies show that the generation of “Baby Boomers” and generation X were graying and dwindling in the American market (Keegan & Green, 2011), which also influenced their marketing decisions.

Their next approach in their strategy was the Concentrated Global Marketing approach. This targeting strategy involves devising a marketing mix to reach a niche that is a single segment of the global market (Keegan & Green, 2011).

The generation Y consumers account for approximately 71 million people in this segment of the market. Therefore, the focus of their studies is to target only this group by bringing to market a product directed to Gen Y and to build their brand loyalty among the nation’s youth (Keegan & Green, 2011). The Asian automakers conducted a study of the consumer market for the age group of 17-37 and found that Gen Y does not want to follow the trends of their parents, but want differentiation.

This is where the third criteria come into play. The third criterion for target marketing options is differentiated global marketing. Generation Y want to make their own statements. Their desires are to have a lot of space for friends and equipment, and at the lowest possible price. The older generation of consumers prefers cars that cost much more than Gen Y’s can afford, the models they prefer are sports, luxury and large gas consuming models which are more than the gen Y’s can afford. After all, they do not have the available funds as their parents.

They saw that the generation Y consumers preferred the Japanese models which is a trend of “coolness” (Keegan & Green, 2011) among them. The designs of the Japanese models are different to allow the younger generation to express and distinguish themselves in a new kind of way through the design of their cars that are different from their parent’s cars. Another source of implementing their market differentiation is through the type of advertising used.

The Asian automakers choose to advertise their product in different ways tailored to attract the attention of those of generation Y. Since the generation is very much accustomed to social media, electronic media sources, internet and websites, which are just a few of the modern ways the automakers choose to advertise to generation Y. To this point, reports show that they are seeing signs of success and the possibility of building brand loyalty among the younger consumers (Keegan & Green, 2011).

Analyze the strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion. From my reading in the chapter and the case study, I believe that Honda and Toyota employed various parts of the Global Market Segmentation in their strategy to create the Element and the Scion. They incorporated Product Differentiation, which was a key strategy for the two automakers Honda and Toyota. According to Family Car Guide, the strategy behind the Honda Element was to replace the aging mini-van (Geller, 2006). This is taking a segment of the market and designing a product that targets those specifically looking for a saluting to getting away from the normal trends in an economical and efficient vehicle.

The initial strategy for the design of the Element targeted active college-aged men who are the outdoorsy type. The Scion on the other hand targeted the young that were seeking a product that is affordable, high performing and is a modern style alternative to Toyota's existing lineup. Toyota also used this style and brand to build brand loyalty as a byproduct of their strategy. Both automakers applied Demographic Segmentation portions such as age distribution, income levels, and gender (Element) considerations. Next, they used portions of Psychographic Segmentation, which involves grouping people in terms of attitudes, values and lifestyles. I see this strongly in the Scion strategy.

Another part of their strategy is the primary source of advertising. For the targeted groups they are marketing to, their strategy had to be different. To reach generation Y population, it was best suited to reach them through various untraditional venues such as via internet, which is where Gen Y spends most of their time. Traditional advertising means seemed to turn the Gen Y population off. So social media avenues, word of mouth, car shows were many of the ways the Scion was advertised. As for the Element, when you would see an Element advertisement it is noticed that it always show young maybe college aged males with either surf boards or skis, etc, on the vehicle.

The ruggedness, but practicality of the vehicle is emphasized. The efforts and careful planning of their strategy has made the two automakers successful at marketing their product by employing the different levels of global marketing segmentation. Although the strategy was to target a youthful market, the Element and the Scion has attracted many consumers who are beyond generation Y. According to an article in the Los Angeles Times, “Cars for the Young Take a Detour, 2006”, The two models are also “attracting buyers who are well into their 40s, 50’s and 60s”. (Geller, 2006). Nevertheless, the automakers have found that the vehicle has multiple uses and fit various needs for those outside the generation Y consumers.

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. In an article from the Wall Street Journal, Gina Chon stated, “Scion, Toyota Motor Corp.'s youth-focused small-car brand, has decided it is too hot for its own good. The brand is on track to beat its 150,000-car-a-year sales goal by 25,000 vehicles in 2006.

That is a big reason why Toyota has surpassed DaimlerChrysler AG this year to become the No. 3 automaker in the U.S. in sales. But instead of riding that momentum to increase sales still further, Scion plans to throttle back production to keep sales from going above 150,000 vehicles next year. It is part of marketing strategy to keep the brand special and, above all, cool” [ (Chon, 2006) ].

Research current strategies that Ford and GM are using to cater to this particular market segment.

References (Academic Writing Tips Organization, 2011)http://academicwritingtips.org/component/k2/item/4134-automobile-industry.html?tmpl=component&print=1

(Porretto, 2003)

http://repository.cmu.edu/epp/134/ http://www.automotive.com/new-cars/01/scion/#ixzz1uahnXv66

Another driving force used in their strategy was to take into consideration that on the international markets many consumers followed the trend of “Americanization”. Ultimately, this is what the Asian automakers wanted to do.