Explain the strategy behind Asian automakers targeting Gen Y
The business world is full of competition and the automotive business is not an exception. Gen Y could be defined as the segment of the United States population that was born towards the end of the 20th century (between the years 1977 and 1994). This generation is estimated to be very significant and to contribute a large market size of the automobiles (about 71 million) which is much higher than the previous generation. For this reason, most Asian automakers, for instance, Toyota, Ford, Honda, and Nissan have resulted in targeting the Gen Y since it is a potential market segment.
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The realization that the potential customers to the products of these Asian automakers are not getting any younger but rather aging out is a motivating factor towards targeting the Gen Y. Shortly, the Gen Y is expected to form a significant percentage of the number of people purchasing vehicles from these companies (from market research undertaken). The companies are therefore putting up strategies aimed at capturing as much of the Gen Y as early as possible hence creating a lifelong pool of customers. This is a very positive move which will ensure a constant flow of demand from the Gen Y.
This will, however, be facilitated by the production of new make of cars that will fulfill the requirements of this generation to avoid losing them to other companies. Customer attraction is a critical aspect and their retention is also a concept of greater importance and any business irrespective of size should take this matter seriously and do anything possible despite the cost incurred (John Porretto Associated Press 2003).
Analyze the strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion
In the recent past, Honda and Toyota companies have been involved in the creation of different types of vehicles for various reasons, for instance, to meet the emerging desires of customers. The strategy behind Honda and Toyota creating new vehicles such as the Element and the Scion is however deemed to be unique. Toyota company’s launching of a new make of vehicles by the name Scion is fueled by the need to boost its sales and profits by attracting as many of the Gen Y as possible. The company hopes that the make, Scion, will appeal to a majority of the young people who seek aspects like value and versatility in products. Scion is also cool and unique, a concept that is likely to attract the Gen Y which is the target population.
Honda has, on the other hand, launched the Element, which is a boxy sport vehicle. The vehicle is deemed to match the requirements of the Gen Y, for instance, those who have a passion for surfing, the skiers as well as those who are generally outdoor enthusiasts. It is therefore clear that both Honda and Toyota ‘s major aim of coming up with these new models of vehicles is the fact that they target and have very great hopes on the Gen Y and hence they want to go in line with what pleases the generation to secure a good position/ competitive advantage in the ever-growing competitive market. Although some companies state that they have no plans to produce vehicles specifically for Gen Y, they admit the fact that it is important to have cars that attract the young generation since they are the current and future buyers (Hosegawa, 2008).
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
Every decision is taken to accomplish a given result. Toyota company has decided to limit the number of Scion vehicles in the market for some reason. Sagging scion sales is one of the problems that needed to be tackled. This is due to competition from different points and directions making it seem to be promoting a wrong model. This is enough justification to enable the company to reinforce the brand before it reintroduce it to the market (Hino, 2006).
I agree with the move of Toyota to limit the number of Scion vehicles available for sale. This is because if the company continues to produce and release the vehicles to the market, it may suffer from diseconomies of scales as a result of balancing of input increase with the output increase which may, in turn, cause a rise in the unit cost, an aspect that is not profitable. Limiting the number of cars will also bring about competition especially among Gen Y making the product unique as not everybody will be able to acquire it. Limiting the supply of Scion will also contribute to the building of long-term customer loyalty to the brand and reintroduction of the model or any other make is likely to attract and retain new and existing customers. It will also help to reinforce the brand.
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Research current strategies that Ford and GM are using to cater to this particular market segment
Various strategies are employed by different businesses to achieve particular results aimed at enhancing efficiency, effectiveness, and economy which in turn lead to increased productivity and profitability. We have seen that Toyota and Honda use the strategy of attracting and capturing the Gen Y by coming up with new products with exciting features as a way of boosting their sales hence increasing profits. Ford Motor Company and the General Motors Corporation (GM) states that they do not have plans to come up with brands that are specifically targeted to Gen Y. All in all, they realize the importance of products that attract the youngsters since there are positive attributes associated with it, for instance, increased sales of different products.
Some of the current strategies employed by these companies to cater to the needs of the young generations include the use of various social media channels, for instance, Twitter, Facebook, Blogs, Youtube, Linkedln as well as Flickr among others. This is a very effective way of reaching the young generation as they are consistent followers of these social networks and hence any relevant information about the products produced by these companies is easily circulated. They utilize all the features in these social networks to make their marketing as effective as possible. The companies also try and come up with features that could easily attract the youngsters in conjunction with the elders by incorporating good features based on market research and upcoming requirements of the different market segments (Law et al, 1991).
Hino, S. (2006). Inside The Mind Of Toyota: Management Principles For Enduring Growth. New York: Productivity Press.
Hosegawa, Y.(2008). Clean Car Wars: How Honda And Toyota Are Winning The Battle Of The Eco-Friendly Autos. New Delhi: John Wiley & Sons.
John Porretto Associated Press (2003). “Automakers target Generation Y”. Deseret News (Salt Lake City). Web.
Law, M.C. et al. (1991). Restructuring The Global Automobile Industry: National And Regional Impacts. UK: Routledge.