1 case study: saturn vs scion october 8, 2007. 2 executive summary
TRANSCRIPT
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Case Study: Saturn vs Scion
October 8, 2007
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Executive Summary
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Saturn
• GM launched Saturn in 1990 to appeal to the young, educated buyers who had been leaving the brand for imports.
• Saturn was initially successful in attracting these buyers because it differentiated itself from GM as a quality brand with impeccable customer service.
• GM failed to protect the integrity of the Saturn brand, failing to invest in new products and allowing it’s image to blend in with the parent company.
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Scion
• Scion was created in 2003 in an attempt to make Toyota a brand that was as important to young people as it had been to boomers.
• Thus far Scion has attracted the industry’s youngest buyer base without cannibalizing Toyota’s young buyers.
• Toyota is carefully cultivating the Scion brand by separating it from the parent brand and allowing to form corporate culture, and to remain on the cutting edge of pop culture.
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Domestics: 1990 State of the Union
• Domestic brands were seeing steady declines in market share as their youngest and most well-educated buyers defected to imports for value and QDR.
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Domestic Sales as % of Industry
50%
60%
70%
80%
90%
71 73 75 77 79 80 81 82 83 84 85 86 87 88 89 90
Domestics were steadily losing market share to imports…
Source: Ward’s Automotive Data, 1971-1990
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…and the defectors were increasingly young, educated buyers.
Source: CDS 1993
Domestic Defectors
Domestic Owners
Import Owners
Median Age 38 45 38
% College Educated
50% 40% 55%
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Saturn“A different kind of car, a different kind of
company”Goal:• Create a brand that appeals to the young, educated buyers who have been defecting to imports. This brand will focus on the very issues that GM has been struggling with; quality, innovative design, and customer service.
Strategy:• Breed a loyal culture by creating a low-pressure, friendly relationship with the customer. This relationship starts with “no haggle pricing” and continues with customer service that people might expect from a bed and breakfast, not a car manufacturer.
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Saturn: First Generation
• Saturn initially attracted young, educated buyers who were considering defecting to an import or have already.
• These buyers found appeal in Saturn’s innovative engineering and attention to QDR.
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10Source: CDS 1993
Saturn immediately attracted buyers that GM had been struggling with; those who had already defected to an import or those who were about to.
Saturn First-Gen Inflow
Additional to HH26%
Replaced Import
24%
Replaced Domestic
(2nd Choice Import)
19%
Replaced Domestic
(2nd Choice
Domestic)31%
43% of
Saturn buyers were either potential domestic defectors (19%) or conquests from imports (24%)
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11Source: CDS 1993
Saturn was initially successful in luring young, well-educated domestic defectors back to GM.
SATURNDomestic Defectors
Domestic Owners
Median Age 37 38 44
% College Educated
62% 50% 40%
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Saturn owners viewed it as a smart buy because of its innovative engineering and solid QDR features.
Saturn Owners
• Well Engineered 80%
• Safe 77%
• Value 75%
• Fun to Drive 74%
• Responsive 70%
Domestic Owners
• Safe 58%
• Fun to Drive 57%
• Functional 55%
• Responsive 51%
• Well Engineered 50%
Domestic Defectors
• Well Engineered 65%
• Fun to Drive 64%
• Responsive 58%
• Value 55%
• Functional 52%
Source: CDS 1993
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• As GM failed to invest in the brand, Saturn’s sales flattened, and its buyer base began to resemble the buyer bases of GM and the other domestics.
Only a few new models were introduced, and those were GM products repurposed for Saturn, which lacked the quality of the initial Saturn offerings.
• Disappointed in Saturn’s limited lineup and quality problems, the young, educated buyers that had initially formed Saturn’s loyal buyer core migrated to imports.
Saturn Loses Momentum
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1993 2007 (%pts)
Responsive 70% 28% -42
Well Engineered 80% 42% -38
Sporty 59% 37% -21
Safe 77% 57% -20
Fun To Drive 74% 55% -19
Youthful 27% 13% -15
Advanced 20% 10% -10
Good Value 75% 66% -9
As GM failed to invest in the brand, Saturn lost ground on engineering, QDR, and value…
Source: CDS 1993-2007q1-2
Images Among Saturn Owners, 1993 vs. 1997
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…as a result, overall brand opinion suffered.
Total Market Change in Overall Brand Opinion, 2006 vs. 1999
-25.00% -20.00% -15.00% -10.00% -5.00% 0.00% 5.00% 10.00% 15.00%
Saturn
Ford
Chrysler
Chevrolet
Mazda
Dodge
Honda
Toyota
Volkswagen
Nissan
Hyundai
% change in Excellent or Very Good overall opinion
Chevrolet
Chrysler
da
Source: AFI 1999, 2006
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Saturn: Inflow by Country of Manufacturer
0%
25%
50%
75%
100%
93 95 96 97 98 99 00 01 02 03 04 05 06 07
Domestic
Import
Poor quality and a lack of new, innovative products caused Saturn to steadily lose its ability to conquest from imports…
Source: CDS 1993-2007q1-2
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Saturn: Outflow by Country of Manufacturer
0%
25%
50%
75%
100%
93 95 96 97 98 99 00 01 02 03 04 05 06 07
Domestic
Import
…and Saturn replacers increasingly opted for the QDR and value offered by imports.
Source: CDS 1993-2007q1-2
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Median Age
35
40
45
50
55
93 95 96 97 98 99 00 01 02 03 04 05 06 07
SaturnDomestic Non-Lux
Import Non-Lux
Overall, Saturn lost its edge with the young, educated buyers, and began to look like GM and other domestics.
Source: CDS 1993-2007q1-2
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% College Educated
25%
35%
45%
55%
65%
75%
93 95 96 97 98 99 00 01 02 03 04 05 06 07
SaturnDomestic Non-Lux
Import Non-Lux
Overall, Saturn lost its edge with the young, educated buyers, and began to look like GM and other domestics.
Source: CDS 1993-2007q1-2
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Toyota: 2003 State of the Union
• Toyota’s sales were at all-time highs, but it was attracting an increasingly older buyer base.
• Young, cool buyers viewed Toyota as a brand for their parents or grandparents, but not for them.
• The youngest buyers in 2003 were only the tip of the Gen Y iceberg; the generation eventually will dominate the automotive landscape.
“Kids saw Toyota as a Japanese equivalent of General Motors, with uninspired design, ordinary performance, and staid marketing.” – Automotive News, Oct. 29, 2007
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Median Age Data
35
40
45
50
1993 1995 1996 1997 1998 1999 2000 2001 2002 2003
Toyota Honda Nissan Import Non-Lux
Toyota was having trouble attracting young people to the brand; it’s owner base was aging more rapidly than
the competition…
Source: CDS 1993-2003
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…and Toyota’s young buyers scored lower on cool, exciting imagery than the typical young buyer.
Source: CDS 2000-2003
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Scion“WHAT MOVES YOU”
Source: Automotive News, October 29, 2007 (Toyota’s 50th Anniversary Commemorative Edition)
Goal• Create a cool, exciting youth brand whose culture is completely separate from Toyota’s, and whose sales do not cannibalize Toyota’s.
Strategy• Offer small, stylish, single-trim cars that come fully loaded at a reasonable, non-negotiable price.
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Scion
• Scion attracted the youngest buyer base in the industry without cannibalizing from Toyota.
• Scion made Toyota an important and relevant brand to young people.
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Scion attracted the industry’s highest mix of young buyers…
Source: CDS 2006
% 18-34
Volume: 18-34
Scion 48.3% 82,208
Mazda 38.9% 88,058
VW 37.0% 83,740
Mini 34.6% 12,776
Nissan 29.0% 234,707
Acura 28.0% 53,085
Mitsubishi 27.6% 25,849
Honda 25.3% 324,943
Audi 24.7% 19,035
Infiniti 24.6% 27,271
Memo: Toyota 19.0% 338,774
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26Source: CDS 2003-2006
…and Scion buyers were more likely than typical young buyers to think of their vehicles as cool and exciting.
Youth Image Gap Analysis: Scion vs Non Luxury
-15%
-15%
-12%
14%
17%
19%
21%
23%
23%
31%
44%
-24%
-30% -20% -10% 0% 10% 20% 30% 40% 50%
Family Oriented
Rugged
Powerful
Safe
Sleek
Sporty
Good Value
Distinctive
Economical
Fun To Drive
Cute
Youthful
Among Buyers Aged 18-34
Non-Luxury Scion
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Scion bred a completely different culture from Toyota. Far from cannibalizing Toyota’s young
buyers, Scion instead attracted a younger buyer who was likely to be single and still in college…
Demos Scion Toyota
Average Age 24.5 27.5
% Singles 68% 44%
Median Income $54,540 $66,119
Education
Some College 41% 22%
College Grad 29% 44%
Demographics Among Buyers 18-34
Source: CDS 2006
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28Source: CDS 2006
…Scion’s young buyers viewed their vehicles with much cooler, more exciting images than young Toyota buyers.
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Scion intercepted these buyers most often from Honda, which is Toyota’s biggest competitor in the youth
market.
Purchased Scion, 2nd Choice:
Honda 28.1%
Toyota 22.6%
Ford 6.7%
Mazda 6.0%
Chevrolet 4.5%
VW 3.6%
Acura 3.1%
Nissan 2.8%
Subaru 2.6%
Chrysler 2.5%Source: CDS 2003-2006
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Appendix
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Sales: Saturn vs Scion
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06
Saturn
Scion
Source: Ward’s automotive yearbook