1. Executive Summary

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1 1. Executive Summary In 2003, Toyota Motor Corporation released their third division known as Scion. Scion is a youth oriented company that produces stylish and affordable transportation that meets the needs for the everyday Generation Y person. Generation Y is typically defined as someone who is in their late teens to early twenties, and who tends to be informationrich, time-poor, and technologically-savvy. Scion keeps everything as simple as possible in the car buying experience, from monospec vehicles to pure pricing. One of the best factors helping Scion is that it is a division of Toyota Motor Corporation, one of the leading automobile manufacturers in America. This division was created in attempt to make up for the failure of Toyota s Project Genesis, an earlier attempt to gain the teenage buyer. The lesson Toyota learned from this failure was that young people generally categorize the Toyota logo as an older person s car. With this knowledge in hand, Scion seemed to be a sure fire way to go. With three vehicles currently in production, Scion has surprised many with having over 150,000 units sold in 2005 alone. This number has toppled some of the veteran car manufacturers of today. These numbers still continue to rise, with Scion showing a thirtyseven percent increase in sales from April to May of this year. Scion sees direct competition from other small car manufacturers like Honda, Mazda, and Kia. However with the introduction of the tc they are also seeing competition from some of the bigger cars from Chevrolet and Ford.

2 Neither sales nor competition seem to be an issue for Scion, but we feel as if they are missing their target market. The target market Scion has set is the average 16 to 24 year old student with a tight budget, but a will to be stylish. However demographics are showing that the average Scion customer is somewhere in the age range of years old. With this in mind, we feel Scion needs to direct focus towards their target market. This marketing plan outlines ways in which Scion should be able to lower the average age of Scion buyers. Starting out with just a little more advertising, preferably by means of television commercials, and eventually the release of new models, we feel Scion can achieve this goal.

3 2. Description of Company Scion, a division of Toyota Motor Sales, had its announced launch in March of 2002; debuting the sub-compact xa and the urban box known as the xb. Neither model was released for sale until January of 2003, with the introduction of the third car, conveniently named the tc in The overall premise of Scion is to provide a trendy and affordable form of transportation to the youth of America. Scion has introduced a concept of pure pricing where the options almost do not exist with the side airbags as only exception. The customer starts and finishes with three choices: transmission, color, and with two of the models, wheel covers. This is to prevent the confusion of option-packages which other car manufacturing companies utilize. However, this is not to say the Scion cars come without equipment; they are significantly well equipped for the price. For $13,320 for the xa and $14,570 for the xb, they both come standard with power windows, power door locks with keyless entry, air conditioning, AM/FM/CD player, dual airbags, and Antilock Braking Systems (ABS). The tc at $16,940 includes all of the above, plus a panoramic moonroof, cruise control, and 17-inch alloy wheels. With sales reaching 156,485 for 2005 alone, Scion is obviously on the right track. Overall, Scion seems to be another example of Toyota s successful use of multibranding. This marketing plan s goal is to outline how to keep increasing sales to the target market, which is the fashionable youth of America.

4 3.Strategic plan/focus Mission/Vision To satisfy a trend setting youthful buyer through distinctive products and an innovative, consumer-driven process Goals Non-financial- -Maintain or increase appeal to target audience (16-24 year olds) -Increase sales with the new generation xb -Increase awareness of current models -Maintain/achieve top selling sub-compact status -Maintain number one spot for Edmunds Top 10 Cars for Drivers Under 25 Financial- -Maintain cost to consumers while increasing quality -Assist Toyota in gaining the top automotive market share in America -Attempt to increase ranking on Edmunds Top 10 Cheapest Cars List Core Competency and Sustainable Competitive Advantage The word scion by definition is a descendant of or heir to, which is a great way to describe Scion s connection to Toyota. Toyota originated back in 1867 with Kiichiro Toyoda heading the company. With over 100 years of experience, Toyota obviously knows what they are doing. This extensive Toyota support gives Scion a great competitive advantage.

5 4. Situation Analysis SWOT Analysis The following tables show internal and external factors affecting the market opportunities for Scion. Internal Factors Strengths Weaknesses Management Shares managers with experienced Toyota managers Scion is still developing, therefore the experience overall is lacking Offerings High quality, low-cost alternative Lacks options most other cars Marketing Personnel Finance Manufacturing R&D Toyota s financial backing for marketing exploits Required training to sell Scion, but still located within Toyota dealership Full Toyota backing, excellent growth since introduction Delay in US model allows time for debugging Efforts to maintain price while keeping vehicles in style and retaining quality give Taking risk of dramatic styling and limited target market Personnel outside of the target audience lack appeal to target audience Minimal profit due to pure pricing All Scions are produced in Japan Minimal US feedback for R&D on new models External Factors Opportunities Threats Social Currently appeals to the youth Constant change in trends Competitive Distinct name still associated with Toyota/Numerous public relations events New and upcoming Subcompacts Technological Better standard audio features than competitors/unique accessories Competition is finding cheaper replacement for accessories Economic Special financing for students Decrease in overall vehicle purchases due to higher gas prices Regulatory Numerous Edmunds Top 10 Lists Cooperation between competitors to develop alternative products

6 Scion s internal strengths include the ability to provide high quality products that are low cost alternatives to competitors products. A major strength is full Toyota backing. Scion s internal weaknesses include its lack of U.S. feedback on new models, minimal profit due to pure pricing, and the fact that Scion is still developing, and consequently, the internal experience is lacking. Scion s external opportunities include its appeal to youth, special financing for students, and better standard audio features compared to its competitors. There are some major external threats to Scion. The constant change in trend, new and upcoming subcompact vehicles from competitors, and strategic alliances between competitors to develop alternative products are only a few examples of threats. Industry Analysis Scion s market share is directly incorporated into Toyota s overall market share. Toyota currently leads the market with 12.2%. Chevrolet was a close second with 11.4%. Chevrolet, Honda, and Mazda are Scion s main competitors. Company Market Share Toyota 12.2% Chevrolet 11.4% Honda 8.0% Mazda 2.5%

7 Competitors The Scion xa/xb has its main competition from the new Honda Fit, which is also targeted towards the fashionable youth. Other competition for the xa/xb is the Chevrolet Aveo, the Hyundai Accent, and the Kia Rio. The Aveo, Accent, and Rio have a competitive advantage of being cheaper priced cars, with less quality. The tc with its slightly larger size sees its competition from the Honda Civic, Mazda3, and Ford Focus. The Civic, Mazda3, and Focus also center on being cheaper alternatives for the tc. More recently the Chevy Cobalt has been introduced as a hip alternative for the tc. Company Analysis Scion has many strong points supporting the company; with the largest being its connection with Toyota. Toyota supports Scion in all of its endeavors. Scion also provides convenience when shopping for a new car; primarily through Pure Pricing and the elimination of options-packages. Customer Analysis The customer analysis will break down the typical Scion purchaser as well as the environmental and technological concerns involved. The typical Scion customer is expected to be part of the maturing Generation Y. Generation Y typically describes teenagers and individuals in their early to mid 20 s. They tend to be technologically savvy, on the cutting edge of fashion, and are financially motivated.

8 Scion customers are also motivated by environmental and technological factors. With continually rising gas prices and numerous government regulations, the desire for a fuel efficient vehicle has been on the rise. Scion answers this call with two cars having fuel ratings over 30 miles per gallon, and the third having 23 miles per gallon. Both the xa and xb were listed on Edmund s Top 10 Most Fuel Efficient Cars for 2005.