Toyota Targets Japan's Babyboomers with Lexus Brand

   Toyota is bringing the luxury Lexus brand, marketed in North America, back to its home, Japan. One of the target markets is the post-war babyboom generation now approaching retirement.
   In the first phase, a network of 143 Lexus showrooms will open their doors on August 30, rising to 151 within the year and 180 by 2006. Through this marketing campaign, Toyota aims to raise the bar in the high-end car market in Japan.

New auto brand Lexus, targeted at baby boomers(Photo: Lexus IS350)

   Unlike in the US market, Toyota has two strategic aims in trying to enhance the brand in Japan.
   One is to tap a pool of potential demand that will emerge in the near future. From 2007, more and more members of the post-war babyboomer generation will approach retirement. By offering an alternative to the conventional Toyota range, the company aims to transform this pension-rich section of society into a major new customer base.

Strategies for Displacing European Brands in the Japanese market

   Toyota's other strategy fighting off the European challenge in the Japanese market. Currently Toyota has a dominant share of around 45% of its home market. But its share of the premium end-the segment where automakers can make huge profits with models priced at 5,000,000 yen or more - has dipped below 30%. By contrast, the combined share of European names such as Mercedes Benz, BMW and Audi has risen to around 60%, even though they only have around 8% of the whole market. The conventional Toyota brand has not been strong enough to reverse this trend.
   Of course, Toyota has long sold the luxury models LS, GS, IS and SC (as Celsior, Aristo, Altezza and Soarer) in Lexus showrooms in Japan. Any launch of a new brand would involve a complete model change to these ranges, but it is not clear how this would affect customer perceptions of Lexus as a luxury brand.

Lexus Still Leads Premium Brand Rankings in US

Lexus dealers operated in North American market

   Lexus was introduced in 1989 in the US, the world's largest car market, to reinforce Toyota's business base there. The brand was a new departure for Toyota, and it changed the reputation of Toyota vehicles as compact cars for the everyman. The goal was break into the top end of the wealthy East Coast market, the stronghold of the U.S. Big Three.
   This strategy was a great success. From 1995 to 2004, the Lexus brand came top for ten consecutive years in the durability/reliability surveys conducted by U. S. research company JD Power and Associates.

   Since 2000, the brand has retained its No. 1 ranking in units sold in the luxury segment for five years straight, selling 290,000 units in 2004. This track record is set to serve as a springboard for Toyota's triumphal "return" to the motherland.