Case Study 3: Carmakers Target Gen Y (Case 7-2)
Due Week 6 and worth 240 points
Write a 4-5 page report that answers the following:
1.Explain the strategy behind Asian automakers targeting Gen Y.
2.Analyze the strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion.
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.
4.Research current strategies that Ford and GM are using to cater to this particular market segment.
5.Provide evidence from at least three (3) qualified sources, e.g., textbook, peer-reviewed journals, government, or professional organizations Websites. Note: Properly cite your sources in the report and on a separate reference page that follows the APA style conventions.
Your assignment must:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions.
Include a cover page containing the title of the assignment, the students name, the professors name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The strategy behind Asian automakers targeting Generation Y (Gen Y)
Asian automakers are currently targeting generation Y since this generation has grown to become relevant consumers in present times. According to census conducted in the year 2010, Gen Y comprised approximately 56 million people seconding baby boomers which are considered the largest age group. Notably, baby boomers continue to age leading to a shift in their financial priorities. According to Mandel et.al (2006), Gen Y earns an average of $ 50,000 hence their growing purchasing power. This has increasingly attracted much focus as the next target by majority of Asian automakers. According to current statistics, several young people aged between 22- 30 years plan to purchase motor vehicles. Further, the same statistical data indicates that about 64% of females within this age group have already purchased a motor vehicle compared to 44% of their male counterparts (Nickell, 2012). In this regard, Asian automakers try to fulfill the desires of Gen Y by availing them with what they need in a unique way. According to Beard (2003), Gen Y possesses purchasing power to a tune of $170 billion which is expected to continue growing as they progress in their careers. Moreover, by Asian automakers targeting Gen Y, this could be a sign of trust that Gen Y is a brand royal whose desires are not only to serve them as individuals, but the entire community. Marketers continue facing a big challenge in handling Gen Y who does not prefer advertising since they believe advertising causes them to purchase products they do not require. Moreover, they view advertising as one way of increasing product price which goes contrary to their desire of lowest price possible.
Analysis of the strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion
By both Honda and Toyota manufacturing motor vehicles such as Element and Scion, it shows their efforts in establishing a relationship with Gen Y with a view of improving their brand name (Rechtin, 2009). Notably, Honda’s strategy acknowledges Gen Y varied preferences. According to Keegan and Green (2011), Toyota and Honda are using adaptation and extension strategies to access the global market opportunities. Both automakers seem to have noted the increased purchasing power of Gen Y by becoming more innovative in meeting their needs. In this regard, they have introduced new automobiles in the market at a price within reach of majority of this age group.
The rationale behind Toyota’s decision to limit the number of Scion vehicles available for sale
In 2006, Jim Press, a top executive with Toyota, United States commented on limiting the number of Scion motor vehicles. He explained that any further increase in sale of this brand could only accrue benefits to the Japanese automaker although he stressed that this decision would not lead to loss of customer preference for Scion. Additionally, Jim Press said that “Scion is an incubator” that was meant to help Toyota understand the preferences of the younger generation. The rationale behind limiting Scion’s sale volume could be explained in various ways including: Scion brand could have attained maturity stage and, to remain popular with Gen Y, Toyota had to create exclusivity image for this brand (Mandel et al., 2006). If Toyota continued with production of more Scions, it could have suffered diseconomies of scales. This is because, as it continued pursuing the growing market demand, at some point the rate of input increase could equal the rate of output increase – leading to rise of unit cost. What this means is that Toyota could be needed to produce more to meet the market demand. This would also require the company to increase labor and build additional plants in order to produce more cars. More so, by limiting Scion sales volume, Toyota could build long-term brand loyalty from its existing clientele. This is because, when introducing a new model, it could be easier to capture the existing customers. Last but not the least, is the need of product uniqueness and individualism. Toyota decision to limit sales volume could be an act of supporting individualism by maintaining personal brand preference for Gen Y. Excitingly, product uniqueness and the element of individuality makes a brand not only exclusive, but also limited and luxurious (Mandel et al., 2006 ). The approach taken by Toyota, on the other hand, could be very dangerous as it might lead to loss of clients. Some opponents of this move argue that instead Toyota could have pursued brand improvement through other ways such as creating emotional appeal via marketing. Further, to build brand image, Toyota could have worked on symbols, images and design of Scion rather that merely negating the supply factors to address the issue of loyalty.
Current research strategies that Ford and General Motors (GM) are using to cater for this particular market segment
To match Gen Y preferences, GM and Ford are renewing their old models while the Asian automakers continue innovating new cars with modern designs. For instance, Ford has radically transformed their old models to suit the signature models for the youthful market. Further, noting that majority of Gen Y uses social media to engage with brand………………………………………………………………..
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