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Mahesh

Dipika

Rupali

Ralph

CASE SUMMARY In the 1980s, Toyota developed a concept of their

new car Lexus that was destined to be success based on a large and affluent market for cars with exceptional performance. However, the market was unwilling to pay the expensive price that Mercedes charged for their kind. Toyota targeted this market & introduced the Lexus in 1989 along with clever advertising. Lexus included with all the features that Mercedes had but in addition Toyota focused on the performance & stability of the car. As success continued, Lexus raised its price but unexpectedly it didn’t work well. New advertising Campaign was then involved to gain emotional response toward Lexus. Lexus sponsored a “New World of Luxury” sweepstakes on the TiVo promotional page.

in durabilityin retention of customers

in customer satisfaction

in sellingluxury brand

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QuestionsTOBE

Discussed

• Describe the management decision problem facing Lexus as it seeks to fight competition from other luxury car manufacturers, such as Mercedes, BMW, and Jaguar, as well as competition from “near luxury” autos like the Nissan Maxima and the Mazda Millennia.

• Formulate the marketing research problem corresponding to the management decision problem you have identified in (1).

• Develop a graphical model explaining the consumer choice process for luxury cars.

• Identify two research questions based on the definition of the marketing research problem and the graphical model.

• Develop at least one hypothesis for each research question you have identified in (4).

1

2.

3.

4.

5.

Asks what the

decision maker

needs to do

Action Oriented

Focuses on

symptoms

The decision problems (DP) that Lexus faced are:DP-1 “Should the price of Lexus be increased?”

DP-2 “Should non-traditional advertising and promotion be used?”

DP-3 “Should SUV of Lexus be targeted to the younger consumers?”

DP-4 “Will Lexus be able to gain new customer and retain existing clients?”

Management Decision Problem

Asks what informatio

n is needed &

how to collect it

Information Oriented

Focuses on

underlying cause

DP-1: “Should the price of Lexus be increased?”

Marketing Research Problem Broad Statement:

“To determine the price elasticity of demand and the impact on sales and profits of increased price of Lexus”

Specific Components:

a) What is the overall effect of price increase of Luxury vehicle?

b) What is the prospective consumers’ reaction toward the increase in price?

Marketing Research Problem

DP-2: “Should non-traditional advertising and promotion be used?”

Marketing Research Problem Broad Statement:

“To determine the effectiveness of the non-traditional advertising and promotion”

Specific Components:

a) Are non-traditional advertising and promotional programs accepted among potential consumers?

b) Are non-traditional advertising & promotion programs effective in attracting new consumers?

Marketing Research Problem

DP-3: “Should SUV of Lexus be targeted to the younger consumers?”

Marketing Research Problem Broad Statement:

“To determine the preferences and purchase intention of young customer groups”

Specific Components:

a) What features younger consumers look for in luxury cars?

b) What are the demographic and psychographic profiles of the young consumers?

Marketing Research Problem

DP-4: “Will Lexus be able to gain new customer and retain existing clients?”

Marketing Research Problem Broad Statement:

“To determine if customers will be loyal to Lexus in long term”

Specific Components:

a) Who are the customers?

b) What is the extent of brand loyalty of the customers to Lexus?

Marketing Research Problem

(1) Reliability (2) Quality

(3) Durability (4) Safety

(5) Security (6) Performance

(7) Efficiency (8) Technology

(9) Handling (10) Value

(11) Style (12) Comfort

(13) Prestige (14) Status

And (15) Visual Impact.

attitude variables

gRaphical model

Luxury Vehicle’s

Characteristics/ Features

Prospective

Consumers

ReliabilityQualityDurabilitySafetySecurityPerformanceEfficiencyTechnologyHandlingValueStyleComfortPrestigeStatusVisual Impact

Prospective

consumers/

Purchasers

attitudes

HYPOTHESIS

QuestionsRes

earc

h

Research PROBLEM“To determine if customers will be loyal to Lexus in long term”

Research QUESTIONS[ i ] Are the Lexus customers loyal to the brand? [ ii ] Can the Lexus customer be segmented?

HYPOTHESIS[ i ] Lexus consumers are loyal towards the brand.[ ii ] There are distinct segments of Lexus customers

Non-Traditional Promotion & Advertising approach

Customer need identification

Are the keys

thank you