Alvin AlexImani Carrasquillo
Michelle ChinHoon Choi
Abhinav DadarkarKirby York
Eine Neue Dimension des Hochleistungsfahrens
AnalysesHistorySWOT, PEST, Industry AnalysisCorporate and Business Level StrategyMarket ResearchPerformance
ResultsGDP and Price Inelasticity for luxury goodsLack of establish history from LexusGerman pride in automobile industry
Recommendations and ConclusionsLexus should stay in GermanyCompetitive pricing away from value-luxury
History Lexus
Launch of Toyota into US○ 1989
Popularity Increase ○ Mid-1990’s
Separation and Globalization○ 2005○ Struggle with brand recognition in
Europe○ 2006 first hybrid and diesel vehicles
Lexus IS 220d did well in the United Kingdom
Strengths
•Expertise in the automobile industry.•Cost Advantage from know-how.•Top designs and functionality for the price.
Weaknesses
•Lack of prestige due to its relationship with to the parent company Toyota.•Price does not match up to the European conscience of luxury. •Lack of Brand equity.
Opportunities
•First-Mover Advantage.•New Distribution Channels.•Customer Taste and Preference.
Threats
•Existing Competitors follow you.•Well established local competition.•Customer Taste and Preference.•Unionization
Political
• Currently run by the Christian Democrat Union
• Powerful Green Party
• CDU and SPD minimum wage battle
Economic
• Steady decline in GDP
• Powerful Union makes doing business difficult
• High unemployment rates
• Two economic stimulus packages in 4 months
Social• Competition with US in
exporting goods
• Environmental activism
• C.A.F.E. (Clean Air for Europe)
• Friends of the Earth
• Anti-nuclear movement
Technological
• Known for engineering and innovation
• Hydroelectric power
• Wind energy
Threat of new entrants is Low. This is a capital intensive industry. Start up and R&D costs are very high.
The bargaining power of suppliers is Low. Lexus works with small, high quality suppliers the selection of which takes 3-5 years.
The threat of substitutes is relatively High. Competitors have a very similar line-up of cars. Differentiation is key
Bargaining power of consumers is Low: Consumers have weak bargaining power for luxury carsLuxury is high and price, therefore “What you pay for, is what you get”
Consumer ReportJD Power and Associates in 2008Lexus among the top five most reliable brands in its
annual car reliability survey
Mission StatementTo attract and retain customers with the highest
value products and services and the most satisfying ownership experience in America.
High quality with total quality management and precision
Pricing StrategyPrice with competition or lose “snob appeal”Lexus models
○ LS 600H will receive a huge price increase which would push the brand into the ultra luxury segment.
Temple students from GermanyInformal InterviewPrimary data and cultural perception
obtained3 important conclusions derived from data
“Luxury is something that has a high price tag and that there is no middle between value and luxury”
“If I had a choice between buying a Benz, Beamer, or Lexus I would definitely not choose Lexus.”
“There is no brand trust in Lexus because of the lack of history it has with Germany”
High price inelasticity for luxury goods, therefore no middle between value and luxury
German luxury brands are favored over foreign luxury brands
History of a company plays a huge role in gaining consumer trust in Germany
Sales/Net Income 2007 2008Toyota 14%/ 20% 10%/ 5%BMW 14%/ 9% (5%)/ (90%)
Mercedes-Benz .2%/ 6% (4%)/ (66%)
Audi 8%/ 23% 2%/ 32%
Gross Profit Margin 2007 2008Mercedes-Benz 23% 24%BMW 20% 14%Toyota 20% 18%Audi 17% 16%
Toyota vs. Indices (S&P,DOW,NAS)
Toyota vs. Luxury Competitors
In the News
April 21, 2009 Lexus improving on researchRe-enter its “LF-A” premium two
seater sports car in the Nurburgring endurance race in Nurburg German
May 21 to 24, 2009 Help build the Lexus brand among
German consumers
Conclusions
FailureMisuse of their self reference criterion
Arrogant based off of US performance
Beating BMW and Mercedes
Conclusions Lack of Research
In Germany the inelasticity for luxury goods is higher US
Per capita GDP is twice as high as the US GDPThe German students
○ “luxury is something that has a high price tag and that there is no middle between value and luxury”
○ “If I had a choice between buying a Benz, Beamer, or Lexus I would definitely not choose Lexus.”
Lack of Reasonable Strategy1% Market Share attributed to Lack of Strategy
—due to inadequate Market Research.
Recommendations Stay in Germany
Away from value luxury More competitive pricing
PricingLexus should not be in the middle
segment in terms of pricing Position Lexus as a luxury carBuilding on platforms (Strengthening
Current Relationships)
Recommendations Models
Minimize the diversification of models available in Germany
Eliminate American favored modelsExclusivity with more innovative
features
German citizensBuild Brand equity amongst German
Consumers
A. Lange & Sohne
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