Let’s suppose that you are a very successful manufacturer of mass-production vehicles.The whole world buys your reasonable, cheap and reliable cars. One day you decide to explore a new market, the one where you were not present earlier. You decide to start building high class luxury cars.
As a world leader in technology you do not encounter any difficulties while designing or constructing the car. The vehicle you built becomes one of the world’s best. But, when you start selling it no one wants to buy it. Why?
The answer is one word – prestige.
Your brand – associated with reasonable, cheap and reliable cars - lacks prestige, so when someone decides to spend 100 000$ on limousine, he would rather buy Mercedes or Cadillac instead.
All of this was a real problem for Japanese car producers in the latter half of the 80s. So what did they do in such situation? They created new, artificial brands. Lexus (Toyota), Acura (Honda), Infiniti (Nissan) and lately DS (Citroen) and Genesis (Hyundai). The only difference between a Toyota and a Lexus is the badge. What is more, in some countries the same cars branded as Lexus in US or Europe are sold as Toyotas!
You would think that customers are not naïve enough to buy such cars. Wrong. All of aforementioned companies made great success in terms of sales and brand-building.
Let us take a closer look at some of them.
Lexus, one of my favourite brands globally, although its not the most luxury one. Since always, as the premium car brand owned by Toyota, "progressive luxury" is the essence and theme of its global marketing.
As the premium brand, it mainly aims to target the luxury market of car maker to compete with BMW, Mercedes-Benz and Audi. Different from the genuine quality with Germans cars, ride comfort, reliability and fuel economy are the major selling point by Lexus. To be honest, I have to say Lexus has very advanced technical which bring lots of reputation. Lexus provides customers with excellent luxury grade interior such as leather seats as standard and manufacturers' warranty. Differ from Toyota, the feeling Lexus bring to customers which are more impressive, Dynamic, Elegant, Advanced and Lasting. On the other hand, consumers trust this brand due to its manufacturing quality through using precise assembly techniques. Truly, part of people underestimate the quality of Lexus. In fact, each Lexus car owns more than 500 specific product standards.
This video fully illustrates the steps that Lexus tried to achieved the highest level via cooperating other company. And this ultimately demonstrates to consumers the sheer quality and effort that every Lexus car is produced with, with quality build control. For different level customers, Lexus provides different categories to them. Such as IS range is the entry level by Lexus and but offer high tech things include satellite navigation, keyless entry, electric heated and ventilated seat etc. On the other hand, as the flag ship mode of Lexus, its primary priority is focusing on luxury. The LS range uses almost all of Lexus’ advanced technology and building techniques, such as laser welding which provided precise seamless steel welds, which make customers have more choices depend on themselves.
When a customer purchases a new Lexus they would become a member of the Lexus Encore privileges programme, which offers exclusive benefits such as free servicing to every Lexus even pre-owned ones within the factory warranty period, 100 000 kilometers or within 4 years whichever comes first. No matter where the 4S shop is, customers would enjoy those privileges.
Based on its actual brand position, Lexus try to form their automobile industry and compete others, such as BMW and Mercedes. Lexus develops breadth in their product mix to accommodate different car design preference mainly the mostly used, sedans, coupes, SUVs, hatchbacks and convertibles. Lexus follows the stream of global automobile industry, CT range launched was a good example. The Lexus CT 200H has both a petrol and electric engine, much like a Toyota Prius, but is aimed at the luxury market. This technology is leading the current automobile industry.
So, what's the brand strategy in next period since Infinity already own big market share in U.S. and launched couple famous different range cars. If you look at Infinity from a global view, Infinity was very much in its beginning stage. Infinity just started up in China and sold around 17,000 cars last year and Europe is in even more of a startup position. By comparison, the U.S. market is quite mature.
For Infiniti, next one to two years will be important by preparation for next major growth stage. Afterward, Infinity will put out five new cars by 2018. Right now Infiniti's lineup consists of the all-new Q50 sedan and carryover models renamed Q or QX. At that time, Infinity will no longer be chasing the vision, will no longer just try to furthermore its market share, but there and defending it.
Their goal is to sell 500,000 cars sold globally by 2020. With these new models comes an ambitious sales plan. Maybe time will tell everything, but new models and establishing a new identity for themselves is the key.
The newest player on artificially-created premium brands market. Genesis is the first Korean brand in this niche, and it belongs to the largest Korean car manufacturer – Hyundai. The case is pretty much the same as with the other brands like this – a producer of cheap cars decides to make something carrying more prestige.
Genesis will target younger, upscale buyers who are “savvy, affluent progressives, who are reasonable, progressive and young” said Euisun Chung, Hyundai Motor Co. vice chairman. Genesis brand is still yet to start, and it plans to offer six different models by 2020. Will it become successful? They clearly follow a path established by likes of Lexus and Infiniti, so it is more than likely.
Your brand – associated with reasonable, cheap and reliable cars - lacks prestige, so when someone decides to spend 100 000$ on limousine, he would rather buy Mercedes or Cadillac instead.
All of this was a real problem for Japanese car producers in the latter half of the 80s. So what did they do in such situation? They created new, artificial brands. Lexus (Toyota), Acura (Honda), Infiniti (Nissan) and lately DS (Citroen) and Genesis (Hyundai). The only difference between a Toyota and a Lexus is the badge. What is more, in some countries the same cars branded as Lexus in US or Europe are sold as Toyotas!
You would think that customers are not naïve enough to buy such cars. Wrong. All of aforementioned companies made great success in terms of sales and brand-building.
Let us take a closer look at some of them.
LEXUS
Lexus, one of my favourite brands globally, although its not the most luxury one. Since always, as the premium car brand owned by Toyota, "progressive luxury" is the essence and theme of its global marketing.
As the premium brand, it mainly aims to target the luxury market of car maker to compete with BMW, Mercedes-Benz and Audi. Different from the genuine quality with Germans cars, ride comfort, reliability and fuel economy are the major selling point by Lexus. To be honest, I have to say Lexus has very advanced technical which bring lots of reputation. Lexus provides customers with excellent luxury grade interior such as leather seats as standard and manufacturers' warranty. Differ from Toyota, the feeling Lexus bring to customers which are more impressive, Dynamic, Elegant, Advanced and Lasting. On the other hand, consumers trust this brand due to its manufacturing quality through using precise assembly techniques. Truly, part of people underestimate the quality of Lexus. In fact, each Lexus car owns more than 500 specific product standards.
This video fully illustrates the steps that Lexus tried to achieved the highest level via cooperating other company. And this ultimately demonstrates to consumers the sheer quality and effort that every Lexus car is produced with, with quality build control. For different level customers, Lexus provides different categories to them. Such as IS range is the entry level by Lexus and but offer high tech things include satellite navigation, keyless entry, electric heated and ventilated seat etc. On the other hand, as the flag ship mode of Lexus, its primary priority is focusing on luxury. The LS range uses almost all of Lexus’ advanced technology and building techniques, such as laser welding which provided precise seamless steel welds, which make customers have more choices depend on themselves.
When a customer purchases a new Lexus they would become a member of the Lexus Encore privileges programme, which offers exclusive benefits such as free servicing to every Lexus even pre-owned ones within the factory warranty period, 100 000 kilometers or within 4 years whichever comes first. No matter where the 4S shop is, customers would enjoy those privileges.
Based on its actual brand position, Lexus try to form their automobile industry and compete others, such as BMW and Mercedes. Lexus develops breadth in their product mix to accommodate different car design preference mainly the mostly used, sedans, coupes, SUVs, hatchbacks and convertibles. Lexus follows the stream of global automobile industry, CT range launched was a good example. The Lexus CT 200H has both a petrol and electric engine, much like a Toyota Prius, but is aimed at the luxury market. This technology is leading the current automobile industry.
Now, more Lexus range are applying hybrid technology. Usually these cars are denoted by the suffix of “h” after the model number. For example the GS450h is a medium luxury Lexus with hybrid technology for fuel economy.
How did Lexus, even with designs that are often called bland, become one of the top-selling American luxury cars?
For one thing, Toyota created a distinct identity for Lexus by making it one of the first brands to focus on more than just the car to attracting customers. When customers willing to spend a lot of money to buy this level car, they have bunch of choices. Fortunately, Lexus caught this chance to providing owners a level of service that had not been seen in the industry but that is now emulated by competitors.
Since always, the U.S. is the biggest market for luxury cars in the world and one of Toyota’s biggest regional markets. "Lexus has always been popular with American consumers and sales of the luxury car brand peaked at just over 329,000 units in 2007. The brand led the U.S. luxury car market for 11 years straight before being knocked off its perch by Mercedes-Benz and BMW in 2011 after a Tsunami and an earthquake hit production in Japan" (Trefis).
Because of the high profitability of luxury cars, most auto companies have pursued a strategy of producing a cheaper entry-level vehicle in order to gain sales from consumers who want to purchase luxury brand but aren’t quite prepared to pay, such as Audi A3 and CLA of Mercedez.
But Lexus did not follow this trend, except for CT200h hybrid. Lexus was concerned that by lowering the unit price it would dilute the value of the brand. But as it turns out, Lexus is attracting the same customers without having to reduce its prices. That is why in May of this year, Lexus NX has already become the second highest selling car.
DS
Story of DS symbol began in 1955 with the premiere of first Citroen DS. This luxurious limousine had a groundbreaking design and set new standards in ride quality, handling and braking. It has been manufactured for 20 years and became one of the most recognizable cars of the century. However, Citroen stopped building DS after 1975 and did not present any direct successor. Therefore DS is a little bit different from the other as it bears some kind of heritage with it.
Right now, the time has come for Citroen to reactivate DS as a new premium brand. Why? Citroen has always been a very ambitious company, trying to conquer every niche possible. However, when it came to premium cars they were not very successful. It is easy to see why – although Citroens are considered simultaneously extravagant and inexpensive cars, they are not premium at any point. Their last premium model – C6 – became a great market failure, even though it is used by French government officials.
So it looks like Citroen found a remedy for their issues. They will differentiate their products by selling more exclusive cars under the DS brand, promoted with the slogan “The perfect embodiment of French know-how and luxury”. They not only offer luxury, but also lots of sophisticated technology which Citroen is famous for. So far DS is a great success, with more than 430 000 cars sold since the launch in 2010.
INFINITI
Last year, 2014, Infiniti celebrates its 25th anniversary as a brand, but it is at something of a crossroads. Although it achieved a little accomplishments in early 1990s, the strategy of company in that time seemed to be just bringing various upmodel Nissans from Japan to the U.S., adding leather and a clock, and seeing how it did.
However, with the development of this brand in recent years, Infiniti has already become an important player on the market since it launched G35 and G37 sedans and coupes which are two highly popular cars.
Infinity finished with sales of more than 120,000. Was it our best year? No. Is it on expectation? Yes. And profits were good, although Infinity don't have a final reconciliation.
GENESIS
The newest player on artificially-created premium brands market. Genesis is the first Korean brand in this niche, and it belongs to the largest Korean car manufacturer – Hyundai. The case is pretty much the same as with the other brands like this – a producer of cheap cars decides to make something carrying more prestige.
Genesis will target younger, upscale buyers who are “savvy, affluent progressives, who are reasonable, progressive and young” said Euisun Chung, Hyundai Motor Co. vice chairman. Genesis brand is still yet to start, and it plans to offer six different models by 2020. Will it become successful? They clearly follow a path established by likes of Lexus and Infiniti, so it is more than likely.
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