Here it comes again, another automotive luxury brand seeking to have “wider appeal without tarnishing the image” (Automotive News 1/11/10).
Lexus is concerned that their customers are too old and they are not appealing to the next generation of luxury car buyers. A reasonable concern.
Lexus appears to be addressing this concern in the usual way that automobile manufacturers do.
First, you add product to your line-up that is designed to meet the requirements or interests of the new target group (after all, they’re very different from the current customers), then you lower the cost of entry into your franchise (they don’t have as much money as the current customers) and finally use marketing to convince the younger target that your brand is cool (at least cooler than they think it is).
Unfortunately, this approach always has the same result, you may succeed in selling a few more cars to the new target group but you leave your current customers confused and your brand weakened.
The Automotive News article even quotes Jessica Caldwell from Edmunds.com who says: “Lexus was really strong, but they have lost their footing….BMW is the ‘Ultimate Driving Machine.’ We’re not really sure what Lexus is.” I agree with her. The overheated luxury segment experienced so much growth in the ’90s and early ’00s, that many of the luxury marques that were fortunate enough to have clear positionings in the beginning were weaker and less distinct at the end of the run-up.
Lexus now finds itself competing in a segment that has a third less volume than it did a year and a half ago. Volume growth is going to come from a hard fought battle for share-of-market with the best in the business: Mercedes-Benz, BMW, Audi, Infiniti. As Lexus moves down market into the “near-luxury” segment, more competitors will enter the fray: Acura, VW, Volvo. Every single one of these manufacturers is making well-designed and engineered, high quality vehicles. More than ever, a manufacturer’s brand reputation is a key differentiator.
Now is the time for Lexus to pause and carefully consider its brand values rather than simply expand its product line to appeal to a new target group’s preferences. What is at the heart of the Lexus brand? A few things come to mind: unsurpassed quality, comfort, quiet, sophisticated, conservative. Rather than trying to expand what Lexus stands for, now is the time to re-focus attention on the core values of the brand and make sure that everything they do comes from that core. Let those values drive product offerings, dealer experience and marketing. Find a way to make your established core values relevant to a new audience. That’s how you take an established brand and avoid “tarnishing” it.
The essence of good positioning is knowing what you are….and what you are not. Trying to be all things to all people is the death knell for a brand like Lexus. It won’t be a question of “tarnishing the image,” Lexus won’t have an image.
If Lexus follows the industry’s well worn path to volume growth, another great automotive brand will be allowed to whither away. In 1989, Lexus re-invented the luxury car business and established a new brand. It was an incredibly expensive and difficult thing to do, but they did it and they did it right. I hope they realize how easily all that good work can be undone.
In the meantime, I’ve got my BOHICA t-shirt on.