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Md. Faizur rahman
BBA –MBA

Barun singh

Alham zaidy
 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

Current Presenter
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 durability

in retention of
customers

in customer
satisfaction

in selling
luxury brand

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`
Questions
1 • Describe the management decision problem facing Lexus as

TO
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.

2 • Formulate the marketing research problem corresponding to

. the management decision problem you have identified in (1).

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

4 • Identify two research questions based on the definition of

. the marketing research problem and the graphical model.

5 • Develop at least one hypothesis for each research question

. you have identified in (4).

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 Management Decision Problem

Asks what
the decision Action Focuses on
maker Oriented symptoms
needs to do

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?”
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 Marketing Research Problem

Asks what
information Focuses on
is needed & Information underlying
how to Oriented cause
collect it

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?
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 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?

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 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?

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 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?

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 attitude variables

(1) Reliability (2) Quality (9) Handling (10) Value

(3) Durability (4) Safety (11) Style (12) Comfort

(5) Security (6) Performance (13) Prestige (14) Status

(7) Efficiency (8) Technology And (15) Visual Impact.

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 gRaphical model

Luxury Vehicle’s
Prospective Visual
Performance
Durability
Handling
Technology
Efficiency
Security
Status
Prestige
Safety
Value
Comfort
StyleImpact Characteristics/
Consumers Quality
attitudes
Reliability
Features

Prospective
consumers/
Purchasers

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HYPOTHESIS
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

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Questions
thank
Non-Traditional Promotion &
you
Advertising approach

Customer need identification

Are the keys