Write executive summary

2. This section explores the Lexus NX, one of the most recent brands developed by Lexus in the CUV (crossover utility vehicle) sector. While the CUVs have become incredibly popular with the driving public, it becomes evident that the majority of OEMs (original equipment manufacturers) want to be considered a serious competitor in the premium end of the market (Allen, 2014). Takeaki Kato, an engineer in charge of the development of the Lexus NX, stated that for Lexus NX, "the design team produced a concept that pushed engineering so that we could have a vehicle that drives as good as it looks" (Vasilash, 2014, p. 18). Kato has been seeking to develop a car that was not merely a utility vehicle accompanied with high indicators of comfort, functionality, and higher H-points, but something that has more performance inside rather than engineer's previous advancements in sedan designs (Vasilash, 2014). Keeping that in mind, the Lexus NX was initially planned to be released in North America, but since the risk of entering the market with a completely new vehicle was a risky endeavor, the car was released in Europe and Asia focusing to increase its profile there as well (Allen, 2014).

The Lexus NX product line, being "conceived with an exciting cutting-edge design, featuring amazing technologies and premium attributes" (Caribbean Business Staff, 2015, p. 46) lists several designs with some unique features for each one. The NX 200T version is a 4-cylinder, 2.0-liter bi-turbo engine that yields 235 horsepower, and a six-speed automatic transmission supplied with the front-wheel drive. The NX 200T Sport is similar to the previous model but has an adjusted design that better fits body hold in sports suspension. The innovativeness of the interior and exterior design is best realized in NX 300h, which is a hybrid car combining a 2.5-litre Atkinson cycle gasoline engine with an electric motor excluding diesel option. The system provides a total output of 14SkW/270Nm but it is the fuel economy and emissions figures that are being emphasized by the producer (Allen, 2014).

The exclusiveness of NX interiors is capitalized through the HMI (human-machine interface), which is positioned by Lexus manufacturer as the brand identity. The Lexus NX HMI system includes a new touch control, which replaces the former joystick on other models, known as Remote Touch (Caribbean Business Staff, 2015).

Lexus NX has been developed keeping in mind the following market tastes identified by Toyota researchers. First, it was identified that young American consumers, which are the target market for the Lexus NX, prefer vehicles developed in Europe due to the higher reliability index (Allen, 2014). Second, as Allen (2014) cited Kato's comments on the subject, "younger generation of crossover CUV customers bought smaller versions was because they expect them to have better fuel consumption and better handling" (p.11). Additionally, Lexus has always been perceived as a luxury brand, thus always offering exclusive and unique product, which was certainly realized through the introduction of HMI in the Lexus NX. Finally, a hybrid car which is the case for NX 300h is equipped with an electric motor that is a reaction over the emerging trend of using electric cars. As the majority of countries worldwide still lack the sufficient infrastructure to serve the need of consumers for electric power, the hybrid design is a perfect solution addressing that issue. Consumers are more likely to purchase the Lexus NX since it has a favorable reputation across its target consumer population on the market, and its design is developed following the research on consumers need. It is explicitly positioned as a new product that comprises the need for flexibility and exclusiveness, thus is expected to be appreciated by HNWIs (high net worth individuals) and luxury consumer groups.

3.

Lexus is the luxury car division of Toyota Motor Corporation, which operates across almost all geographies worldwide but has the most established reputation in North America. Lexus' current strategy is to grow its luxury line 10 percent annually for the upcoming 30 years through expansion across North America, as well as a developed presence in emerging markets like China. Lexus is focused over the design of vehicles that are lean in the use of raw materials, fuel and impact on the environment, in the meantime pushing forward throughout performance, as well as luxury. This strategic goal is transformed into the main strength of Lexus in employing the principle of Variable Valve Timing in developing engines, which allows optimizing valve's overlap, as well as shifting manually using console or steering wheel mounted vehicle. The other asset is electronically controlled breaks that are developed with respect to the reduction of possible damage in accidents, integrated with al Lexus' models from the beginning of its operational activities in the world.

The weakness of Lexus is that its cars have many similarities with those developed by Toyota, Lexus' parent company. In marketing terms, this similarity causes lack of prestige and lack of brand equity, as all Toyota's actions are mistakenly mirrored on Lexus image, which in its turn causes declines in Lexus' market shares. For instance, issues with Toyota Camry and Toyota Land Cruiser associated with heat controllers are mirrored on Lexus ES and Lexus LX respectively. Such perception of the product explains why Lexus NX is frequently called a fancier representation of Toyota RAV-4 (Levin, 2014). NX, with an oversized spindle grill, embodies Lexus's latest design language, which, as a matter of taste, has gained acceptance from many for its imagination and distinctiveness, and has significantly higher prices that explain the investment in raw materials and research, but still has a close resemblance with Toyota, making Lexus' products more oriented towards luxurious orientated consumers than that of the general consumers.

The company’s explicit orientation towards the high quality of service and raw materials reflects on its competitive advantage over time. Lexus should capitalize further on its strength of using quality material and keeping on the edge of consumer service over time through offering innovative solutions based on changing consumer preferences. With the Lexus NX 300h, the company is likely to leverage on an opportunity to expand further into the field of hybrid and concept cars which are still highly appreciated among luxury consumers. This will also have to acquire more potential consumers through market penetration, so the risky endeavor of entering the hybrid car segment is probably a good start to finding an appropriate solution for balancing high price and innovative production technologies. The Lexus company should keep creating its pathway through innovation, as this is what helped Lexus to keep its reputation for the last decades in the automotive industry. However, Lexus management should be concerned with a high threat of substitutes for its organizational capacities, as other brands have similar products on the market now already, which could be a long-term risk if innovation and response to consumer needs are lost.

As of now Lexus also has a strong reliability reputation among drivers, this would be their sustainable competitive advantage. Lexus drivers experience less maintenance issues and incur less cost over the lifetime of their vehicles compared to brand such as Mercedes Benz and BMW. Coupled with the constant innovation Lexus seems to deliver with each model such as the Lexus NX with its state of the art HMI features. It will be very difficult for its competitors to mimic Lexus’ constant strides at achieving excellence.

To summarize, Lexus NX is a feasible advancement in Lexus' product line that features innovative elements and interior designs like HMI. This confirms its proactive attitude towards a key strength of using high-quality raw materials and innovation, to differ its products from Toyota as its parent company. Lexus is likely to keep researching other innovations in the automotive industry to prevent the threat of substitutes and maintain its competitive advantage on the market.

4. The growth in the compact-crossover sector is amazing. These cars offer the raised seating position and higher sightlines consumers love with the stability and versatility of a car-based wagon. The crossover segment has enjoyed staggering growth, with a sales increase that's by far the highest in the industry, and automakers are still muddling the category with new contributions such as the Lexus NX. Crossovers are “vehicles that have SUV-like function and utility, but with a chassis and drivetrain more similar to a car than a traditional truck-based SUV” (Ask.Cars.Com, 2015, n.p.). Crossovers have rapidly dominated and overtook the overall SUV market in the past decade and are even increasing in market share in the entire vehicle industry (Madrigal, 2014). Consumers are quickly flocking to prefer this type of vehicle. For example, Lexus expects more than 50 percent of NX buyers will be new to the type (Motorweek, 2015). The luxury compact crossover market therefore represents an important appendage of the booming crossover market. As more American consumers switch to crossovers, many are desiring luxury vehicles (Team, 2014). Accordingly, companies like Lexus are introducing models like the NX at a lower price than traditional luxury SUVs or CUVs in hopes of capturing a wider consumer base (Lieberman, 2015). Other brands like BMW, Mercedes, and Audi are also competing in the luxury compact crossover market as equal contenders, demonstrating a consumer demand for this type of vehicle. Accordingly, “U.S. sales of SUVs and crossovers expanded more rapidly than the overall market (+14%)” (Cain, 2015, n.p.). Taken as a whole, the luxury compact crossover market is a dynamic one in which the Lexus NX is poised to command a heavy market share. 4a.

The Lexus NX is perfectly positioned at the end of several concurrent market trends. First, there is the aforementioned trend within U.S. car ownership to prefer a compact crossover as an alternative to a car, truck, or SUV. Furthermore, the Lexus NX is well positioned at the intersection of two dominant segments of consumers, which are young adults and the wealthy. The young adults who make up the targeted market of the Lexus NX want it all in a vehicle—utility, efficiency, and luxury. Accordingly, Lexus designed its NX with space and power alongside fuel efficiency and high-quality design in order to fulfill these consumer interests.

Fuel efficiency is an important trend impacting automobiles, with a particular emphasis on hybrid vehicles. Consumers want more fuel-efficient vehicles for a variety of reasons including environmental consciousness and immediate economic savings (Nordan, 2013). In general, most consumers consider fuel efficiency when buying a vehicle (Team, 2014). Hybrids are some of the most fuel-efficient vehicles available, and hybrid vehicle sales went up 61 percent in the U.S. (Nordan, 2013). In fact, as of 2013, hybrid vehicle sales had risen from just around 50,000 units in 2002 to nearly 450,000 units in 2012 (Nordan, 2013). The NX hybrid model is therefore an important element of its overall product due to the need to compete within the increasingly mainstream hybrid. In general, the fact that the NX offers industry-standard fuel economy in its non-hybrid models shows that it can at least be no worse the competition in terms of fuel efficiency, an increasingly important market trend.

Safety is another market trend that matters considerably to the market demographic to which the Lexus NX markets. The Lexus NX offers a Pre-Collision System or PCS that “is engineered to detect an imminent frontal collision and, while retracting the front seatbelts, automatically prepares Brake Assist to help provide increased braking pressure the moment you step on the brake pedal,” helps you maintain a preset following distance from the vehicle ahead using the Dynamic Radar Cruise Control feature that “uses radar technology to sense the speed of any vehicles in front of you,” and then adjusts accordingly (Lexus, 2015, n.p.). It's competitors offer similar features, making it important for Lexus to improve and differentiate its own as a means of staying ahead within this market.

Overall, the Lexus NX is well designed to meet the challenges that are faced within its product category. In fact, its design and features tend to represent a great balance between all the elements desired by consumers who purchase luxury compact crossovers. Therefore, its sales should be buoyed by its keen ability to respond to these aforementioned market trends. 4b.

The CUV market continues to grow and shows no sign of stopping, as more American consumer segments are finding that crossovers are the ideal synthesis of their wants and desires (Madrigal, 2014). Therefore, opportunities abound in addition to the obvious opportunity of the growing trend of CUV ownership among American consumers. A primary opportunity is the desire for fuel efficiency among consumers. If Lexus is able to increase the fuel efficiency of its NX, it could put itself ahead of the competition in terms of delivering the most fuel-efficient luxury compact crossover on the market. Another opportunity is the growth within the luxury vehicle market. The luxury vehicle market is growing in the U.S. and has been since the recession in the late 2000s—but more importantly, luxury crossovers are a dominant growth sector within this trend (Team, 2014). Therefore, as a luxury vehicle, the NX is well positioned to capitalize on the growing trend for a preference of luxury among U.S. CUV buyers. 4c.

The overall threat to the CUV is its price range and the risks associated with its target demographic. The Lexus NX costs around $34,000 USD, which places it well above the yearly income of over half Americans (Lieberman, 2015). It is therefore a niche-market vehicle which does not seek mass appeal but rather mass appeal within a certain market. This market is volatile due to the volatility within the U.S. economy for middle class jobs. While the U.S. economy is on a growth trajectory overall and has been since the recession ended in the early 2010s, there continues to be greater pressure experienced within the middle class, which is the market targeted by the NX (Lieberman, 2015). Should these pressures reach the point of decreased discretionary money, the specific demographic that the NX targets—low- to -mid-income luxury crossover consumers—could cease to exist, taking away the NX's consumer base. 5.

The contemporary U.S. automobile industry is increasingly about crossover vehicles. In 2000, crossovers sold just around 1 million units, coming in third to cars, SUVs, and minivans (Madrigal, 2014). By 2013, they came in second at more than 4 million, behind cars at around 7 million (Madrigal, 2014). Yet the market its already saturated, with the dominant manufacturers each having a healthy mix of market share for both CUVs in general as well as luxury CUVs (Madrigal, 2014). Furthermore, Lexus's intimate organizational relationship with Toyota equals an excellent positioning in terms of the bargaining power of suppliers to control costs in terms of production (Lieberman, 2014). While buyers demonstrate significant buying power, the Lexus NX has done an excellent job of identifying and modeling itself around the buying preferences of its target demographic (Lieberman, 2015). Finally, the most significant threat is that of substitutes. As Lexus predicts more than half of the NX buyers will be new to the brand, it is clear that brand loyalty is second to product in the luxury CUV market (Lieberman, 2015). Accordingly, consumers care more about whichever product gives meets their needs best in terms of vehicle purchasing, which is what explains the boom in CUV sales in the first place (Madrigal, 2014).

As part of Porter’s five forces, Lexus has actually entered the market with a competitive advantage over its competitors. Lexus is now the new threat of entry, they have had time to research and consequently develop a product answering most of the consumers problems within the CUV market. The competition rivalry is very close to one another causing threat of substitution for not just Lexus but to any other brand in the CUV market. The Lexus NX has made many strides with innovative technology to compete in this market. The Lexus NX also has the strong brand loyalty of both Lexus and Toyota backing it up, and this in turn causing it to have a strong supplier power. Overall the Lexus NX as well as Lexus itself is well positioned within its industry as Porter's five forces reveal that it is in an advantageous position regarding most of its challenges.

6.

The direct rivals of the Lexus NX are Acura RDX, BMW X3, Mercedes GLK, and Audi Q5. All of these cars are CUV’s. The people that are interested in buying a crossover include someone with an expanding family, someone already with expanded family, and as a higher end comfortable vehicle. Starting with the Acura RDX the motto being “Refuge for your next inspiration.” The Acura RDX starts at $35,095. The fully loaded all wheel drive version starting at $40,195. Adding other features is extra with all brands, but this is starting price point. The Acura RDX looks very sleekly and sporty. The Acura RDX has 3.5L 273 horsepower V6 engine. The Acura averages 20 city and 28 highway. Next taking a look at the BMW X3 the most basic model starting at $38,500, and the high-end model is priced at $45,500. The X3 is a rear wheel drive, 240 horsepower, 27 MPG city and 34 MPG highway, 2.0 turbo, 4-cylinder. The next competitor is Mercedes GLK, which starts at $37,900 for base model, and $39,400 for higher end non-gasoline model. The base model gasoline model has 302 horsepower, with a 3.5L engine, with a towing capacity of 3,500. It averages 24 city and 33 highway MPG. The next model to compare is the Audi Q5 the starting price of $39,300 and the high-end model starting at $52,900. The Q5 averages 24 city and 31 MPG highway.

Last but not the least, the Lexus NX. The low-end model starting at $34,480, and the high-end model $39,720. The base model has 2.0L 235 horsepower engine on the front wheel drive version. It averages 22-MPG city and 28 highway. The strengths on the company level for Lexus are the price point, and the reliability of Toyota backing the car. It also has a five star crash test safety rating. The consumer reviews have been good. Owners of the Lexus NX seem to like the young sporty, aggressive, and sleek body. The HMI allows driver to feel as one with the vehicle. The Lexus NX has a very well refined interior, which is very sleek and modern. The NX has been well received in performance the turbo kicks in at the right times to make the driver feel the power of the NX. While at the same time the driver has power they also have a very well superior sports suspension, which makes the car feel much smaller than it is. The weakness of the company at the competition level is it does not have the strongest engine, or the refined dash of a BWM or a Mercedes, the most technology again such as BMW or Mercedes.

Table Conclusion: Due to Lexus being new to the crossover market, it is a little behind the other companies such as Mercedes, Acura, BMW, and Audi. The rest of the CUV’s already have an established market and already have a loyal fan base. Consumers tend to be loyal to one brand so it is much harder to entice a consumer to switch from one brand to another. The strength are for the new customers looking for a luxury crossover may come to Lexus due to the lower price and the reliability of a Toyota. Another reason a consumer may come to Lexus it is well-refined very aggressive body style and innovation such as HMI. Additionally Lexus is of lower cost for much more luxuries and benefits, essentially more for less. In contrast, consumers will lean to the more established brands just because they have already worked out the issues with the cars and now are working on working towards a more refined crossover, with good MPG and power.

7.

SWOT Analysis

8.

Lexus will use demographic segmentation to sell the Lexus NX among young professionals who are either single or have a small family. Age and income can also be a large factor when using demographic segmentation. Lexus can also target specifically men or women of a certain age. Lexus as well has entered this market as a late bloomer which in turn had gave Lexus time to research all the weaknesses of their competitors and created the answer to any previous segmentation. The Lexus NX could target the tech savvy individual with its HMI features. Of course this young professional, either it be a family man or a trendy young lady or a tech fanatic will have to have the income to purchase this new crossover.

Lexus is relatively an expensive brand, but in the crossover market, the Lexus NX is the least expensive offering more for less. This will also open the door for psychographic segmentation, where young professional who have an image to acquire or maintain, can now purchase a luxurious crossover part of the Lexus reliable brand with a lower price tag compared to its competitors. Consumers who drive Lexus products consider themselves as status conscious socialites. They consider Lexus an upper class brand, which competes with brands such as Mercedes, Audi, BMW, and Acura. Thus, Lexus will use psychographic segmentation to attract these individuals towards the Lexus NX. These individuals are those with finer taste in vehicles where a brand such as Toyota, Honda, and Nissan will not suffice their luxurious thirst. Consequently, Lexus will select their target market through demographic and psychographic segmentation.

8a.

Consumers who are interested in Lexus NX want to get the same benefits or more as they would get from competitors. However, they would like to pay either the same or less. This is why Lexus has targeted their price less than their competitors in the crossover market. Furthermore, Lexus is offering more advance features and qualities than their competitors.

8b.

Lexus criteria are identifiable and reachable. Their segments consist of only young high earning professionals, thus making them easy to identify. If their segments were to consist of older consumers, young consumers, middle aged consumers, and consumers from all income brackets; this would cause great difficulty for Lexus to market to each segment and to identify where to market for each target. Usually, younger consumers with higher income are more informed through social media and other sources. This will in turn ease Lexus’ access to this younger consumer base. Consumers who have higher income tend to have easier access to financing and leasing of a car. As a result, it will be more profitable for Lexus to deal with them.

8c.

Lexus will use differentiated targeting because they want to target the NX’s different models to different people within their segments.

Lexus will target the NX 300h hybrid model to those young consumers in their segment who are environment friendly and care more about gas mileage versus performance.

Lexus will target the standard NX 200t model to those individual in their segments that are more concerned with price than gas mileage and performance.

Lexus will target NX 200t F sport edition model to those individuals in their segments that give their top priority to speed and a sportier look as well as feel to the crossover. Thus, differentiated approach will help Lexus in targeting throughout the segments.

9. Positioning

The Lexus brand overall is a more reliable brand than its competitors. According to US news, Lexus has more products with 5 star reliability rating than any of its competitors. Thus, this brand reliability will help consumers consider Lexus, when purchasing in the crossover market. Lexus NX also has human machine interface features while none of its competitors have this new feature. Accordingly, buyers will prefer NX to its competitors because of this exclusive feature.

Lexus NX came into the market after its competitors, after extensive research and innovation. The Lexus NX is one of a kind with all kinks ironed out. Thus, the NX will not have issues with recalls and other issues found in its competitors. Lexus also add some extra features in order to make it unique. Consequently, NX is on its ideal point since it has less defects and issues than its competitors but with more qualities. And as stated before, since Lexus entered the crossover market at a later time, Lexus has had time to examine the market and really zone in to what consumers are looking for in a crossover. Lexus will position the NX as more reliable than its competitors with HMI feature that makes it unique and better than its competitors.

9a.

For young hip urbanites who seek a luxury crossover of the highest quality, the Lexus NX offers the finest technology as well as the ultimate reliability in the crossover market which ensures a superior luxury crossover driving experience.

10.

Lexus as a whole has positioned itself as an innovative, luxurious, and sustainable global brand, one whom is here to stay for many years to come. The new Lexus NX, a luxury compact crossover, added to this marketing strategy by delivering an exciting new Lexus product to the crossover market. Lexus has taken the next step in increasing their product depth, hopefully increasing market share and taking advantage of the booming crossover market.

Lexus NX as a new product has the support of the Lexus strong brand name known for its reliable and innovative car products. For starters Lexus was the first to introduce the first luxury hybrid and the first eight-speed automatic transmission. Lexus was the first innovators to launch the first dynamic walker recognition software as well as LED low-beam headlights. In a recent interview with Jeff Bracken (Lexus pressroom), the Lexus group vice president stated that the Lexus NX would offer new buyers an “exciting entry point into the Lexus crossover and luxury utility vehicle family. Its expressive design and turbocharged performance embody the technology and design focused direction customers can expect from Lexus” (p.1). Lexus is ready to make their mark in the crossover market.

The Lexus NX, in terms of product strategy positioned itself as the perfect crossover for young hip starter families as well as young urban image-conscious professionals looking to make a statement. After years of failing to benefit from the younger market, Lexus decided to change their marketing strategy for the future and focus their attention to the younger generations by adding product scope positioning, hence the Lexus NX. Lexus decided to first launch the Lexus NX in China, the fastest growing trend setting market of the world, here Lexus confirmed their research about young consumers. These young consumers centered their wants to brand reliability, self-image and design.

The Lexus NX offers luxury at a reasonable price as well as innovative turbocharging allowing for a smaller engine with more power and a more curvilinear design. The Lexus NX is no exceptions to the Lexus standard of elite build quality; NX offers leather stitching body-conforming seats, stand-up screen interface with a touch pad, and Pre-Collision System all standard. One of the main selling points of the Lexus NX is its exciting new feature of Human Machine Interface, or HMI, this new technology focuses on making the driver and the car one. There is less need for the driver to take their eyes off the road. This is increasingly important for young drivers who have a constant need for social presence.

The design of the NX also was meant to be a head turner, with its sleek lines and aggressive sporty design there is no missing it. The NX offers three trims the 200T, 200T F Sport and 300h hybrid for the sustainable green consumers. The EPA gives the Lexus NX a rating of 35/31mpg city/highway, which makes it a leader in its class for fuel economy.

Similarly Lexus choose penetration-pricing strategy for the Lexus NX, coming in the market with a relative low price compared to established direct competitors such as Acura RDX-$35,095, Audi Q5-$39,300, BMW X3-$38,500, and Mercedes Benz GLK-$37,900, the NX starts at MSRP-$34,480. With competitor’s entry pricing ranging from $35,000 to $39,000, the NX offers luxury at a lower price but not too low. The NX also offers leasing options with monthly low payments starting at $369. Even though the Lexus NX is coming in the market at a lower price, many of its competitors have different product depth in the sedan market at a lower price to entice young drivers.

Lexus does not believe in lowering their pricing standard on any of their vehicle types, the Lexus NX is no exception. Lexus has added extra features such as the HMI to compensate for their competitors strategy to entice young drivers. Lexus also has a great reliability rating, making it a strong contender, why go to a brand such as Audi where it is incredibly expensive to maintain the vehicle when you can have a long lasting Lexus. Lexus also believes in laying a foundation for the future, a long-term sustainable growth plan. A plan where they won’t need to lower their price on entry-level luxury vehicles to $30,000 or less by creating vehicles inspired around innovation, design, driver advancement, and the expansion of their product portfolio (such as the Lexus NX). According to Bracken, “We don’t see a need to go there [lowering the price line]…we would rather invest our research and development into more traditional luxury segments” (p.1). Lexus as a company has a plan for the future and will not compromise luxury to huge growth done today but gone tomorrow; they believe in long-term growth. I believe this strategy is great because this touches on consumer psychological needs, consumers want I premium product and having a lower price dilutes the brand.

In terms of distribution, the NX will be a part of selective distribution. The NX will only be sold in Lexus dealerships. I believe this distribution will add to the products buying experience, allowing for customers to receive special attention when in the dealerships. This strategy will also allow consumers to truly experience the ultimate driving experience with Lexus’ HMI feature. According to Bracken, only 40,000 NX units have been allocated for the US in 2015 (Amend). This is a great marketing strategy, this product is new and exciting, and making it limited in the first year will attract the attention of consumers. This will be a smart strategy especially when targeting young consumers, who are always looking for the next big thing. Lexus also offers customizing the NX online and once ready delivering your unique NX to the dealership, again attracting the attention of young consumers who are online shoppers. This will allow the chance to young consumers to feel exclusive; the idea that their NX once customized will be their very own limited NX.

Equally as important is Lexus’ promotional strategy; they must be able to communicate to young consumers their new product. Advertising will be the main promotional strategy. One way Lexus has decided to promote the NX is by teaming up with artist Will.I.Am in creating TV commercials to attract the younger generation. In one specific commercial, the setting is in a futuristic world where the entire set shares the NX's sharp-angled design aesthetic, showing consumers the NX is of the future from its design to its HMI technology. Commercial such as these are created to entice a younger generation of upscale car buyers with sportier designs and sexier advertising. Lexus is also using a print, digital and ooh campaign, with their print appearing in fashion forward magazines such as GQ and Vogue. Their slogan “Beyond Utility. Beyond Boundaries” embodies the strategy focused on young consumers. New design brought by Lexus creates a new form of beauty and reliable utility used in everyday necessities that creates an overall greater human satisfaction. Lexus is making their positioning very clear for the Lexus NX, they want young high class urbanities, in a recent interview with Brian Smith, Lexus vice president of marketing, he stated “This marketing campaign creatively demonstrates that this vehicle–which offers a chiseled, angular body design with an aggressive turbo-charged engine–is fun to drive and ready for any adventure” (Agency Spy).

Lexus is taking the correct steps in acquiring the younger generations attention from working with great artist such as Will.I.Am, as well as appearing in networks such as CBS, ESPN and NBC. They will also market online in such places such as YouTube, Facebook, Google and Twitter. By using this kind of advertising they are targeting the psychological needs of young professional, who are image conscious and always looking for the next big thing whether that be a cool new gadget or a cool new car.

11.

Measuring the success of the promotional package set forth for the Lexus NX will require measuring the success of Lexus advertising. Navigational metric would be the best option for Lexus. As stated before Lexus is running commercials on networks such as CBS, ESPN and NBC. This exposure will allow Lexus to reach a greater audience especially through the use of social media. According to the Pew Research Center, As of January 2014, 74% of online adults use social networking sites (Pew, para 1). This will allow Lexus to reach a wide range of young professionals. The frequency a targeted consumer should be reached should be 3 times, either through commercials, social media, or by the Lexus NX print campaign.

The next step is to see what the young professional consumers think of the advertising campaign, The Burke Test; this classical test will be perfect because Lexus can get an immediate reaction from young consumers. After airing the Lexus NX commercials either through networks or online social media, young women and men will be acquired from many cities to see how well they intake the newest Lexus model. This test will allow Lexus to see if the Beyond Utility slogan is making young consumers understand what Lexus NX stands for, and does the ads persuade them to join the Lexus family. Lexus can also get a sense if their new product depth is attracting this younger generation, versus before their main customers were older individuals, does it grasp young consumers attention enough to bring them over to Lexus.

After the test, Lexus must see what behavioral changes did the young consumers made. For instance, those that purchased the NX, Lexus can survey them and ask what made them buy the NX, was it the advertising. The best way to measure the success of the promotional campaign is by Tracking forward, this evaluative tool can help record the results from the ads. This tracking system can be implemented in all forms of advertising used by Lexus. For example, the network advertising can have a toll-free number assigned directly to the campaign, consumers calling the number to learn more about the NX, or to get information of how to reach a selective dealership or to learn of any new offers can be used to track effectiveness of the ad. The print campaign may also have response cards where the consumer can send inquire of the vehicles; Lexus can track that way as well. And last but not least, the online social media marketing is the easiest to track; information of who is looking at the NX can be analyzed with the tracking software. Once this marketing metrics is implemented Lexus can measure the success of their campaign and eliminate or enhance a program that is working in their favor. In the end Lexus wants to have a fruitful product and this marketing metric can help Lexus measure if their long-term plan is going according to plan.

12.

There are a few steps Lexus’ competitors can take in response to Lexus’ proposed marketing mix. First, they can bring their prices closer to Lexus’ price in order to reduce the price margin. Thus, the consumer considering purchasing the NX because of its relatively low price might consider buying a competitors brand because they will get same for same. Second, they can provide extra warranty and service packages up to a certain millage to attract those consumers who prefer Lexus’ reliability to a competitor’s brand. Third, they can provide better lease options in those distribution centers which are located in downtown and urban areas, since these areas have higher percentage of young professionals. Fourth, they can increase their marketing efforts on social media, thus reaching a greater target audience than Lexus. Finally, they can come up with new small luxury sedan which will have all the same feature like NX but with a lower price.

Lexus will continue providing a superb customer service experience, one which is known for in the automotive industry. As well as fulfill customer needs and expectations by providing vehicles equipped with the latest technology, the most reliable and with the edgiest design. Consequently, consumers will prefer Lexus’ products to the competitors.

perceptual map

reliability nx glk rdx x3 q5 0.0 5.0 4.0 3.0 4.0 1.0 0.0 5.0 3.0 3.0 4.0 2.0 nx glk rdx x3 q5 1.0 1.0 1.0 1.0 1.0 1.0

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