Why Lexus Would Require to Undergo a Re-branding Process - Case Study Example

? Brand Implementation: Lexus Introduction Sarkar , argues that defining the re-branding concept is not a simpletask. Therefore, this has led to a ‘breakage’ of the definition into parts. Thus, the word ‘re’ stands for ‘going back to an earlier state’ while ‘branding’ stands for ‘stigmatizing morally’. Therefore, when this is put together ‘re-branding’ is then represented as ‘going back to an earlier state through moral stigmatization’. Furthermore, it is stated (Balmer, et al., 2005) that a brand consists of “a name, term, symbol, design or a combination that identifies goods or services of one seller or a group of sellers and to differentiate them from those of competitors” (p.32). Therefore, the re-branding process constitutes the development of a new ‘‘name, term, symbol, design or a combination of them’’ with an aim of reaching a new position in the stakeholders’ and competitors’ minds. Therefore, re-branding is measured by the level of changes in marketing aesthetics and brand position. Re-branding is either evolutionary where it involves minor, gradual and hardly perceptible changes in the aesthetics and positioning, or revolutionary where it involves major and identifiable changes in aesthetics and positioning that lead to fundamental re-definition of a company. This is a proposal on how to re-brand Lexus. Therefore, I shall examine the brand’s background and determine its position in the automobile industry. I shall then establish the reasons why the company would require to undergo a re-branding process. I shall then proceed with the formulation of the re-branding plan by taking advantage of underlying opportunities and establish measures to counteract the challenges that might arise. The process shall culminate in the selection of an appropriate branding agency that will carry out the re-branding process. Background and Industry Context According to Bedbury (2003), Lexus is a good example of an effective sub-branding approach. Organizations take the sub-brand route to circumvent brand dilution or clouding that results from associating with the original brand. Therefore, it involves taking a broad step by creating a bigger brand than the parent brand. Although Lexus is fully owned by Toyota, it has developed its distinctive luxury image in the consumers’ minds. This image is entirely different from Toyota’s image that provide feisty and reliable cars and not flashy cars. In this case, Lexus was provided with its own brand values. The launch of a Japanese luxury car to compete with the likes of Cadillac, BMW and Mercedes Benz would have seemed preposterous some decades ago. However, the introduction of the Lexus LS 400 after the investment of colossal amounts and production of numerous prototypes broke this notion. Over the years, Lexus has evolved from an improbable outsider to a formidable force in the luxury automobiles industry. The competition among the leading luxury vehicle manufacturers has been heating up over the last few years. This race involves pushing sales, leading in profitability, admiration for its models and incorporating innovative technologies. Furthermore, to lead in this industry a company has to offer better service and quality besides selling more units than the competitors. Although Europe has been experiencing an economic slump, the luxury automobile producers have been increasing their investments and production capacity. These efforts aim at increasing sales in growing markets such as the United States and China. This is because the luxury industry demands players to continuously raise the bar. Therefore, making counter-cyclical decisions, although not easy, can determine the level of progress that a company will achieve (Ciferri, 2013). Rationale for Re-branding The automobile industry is facing new challenges in controlling carbon dioxide emissions and in reducing fuel consumption. Manufacturers are focusing on developing ‘green’ concept vehicles that can be mass-produced. Therefore, vehicle manufacturers are striving to rebrand their automobiles’ identity as environmentally friendly, clean and efficient. This desire by the companies to change the consumers’ perceptions about their vehicles, has led them even to avoid colours that could be associated to pollutants or soot. Even the luxury brand manufacturers are finding it difficult to sell vehicles that carry the image of a significant polluter and with high fuel consumption. Emission laws have a had huge impact on luxury brands manufacturers in Europe, which forms the largest market globally. Therefore, the car manufacturers have been forced to make significant manufacturing alterations, which are expected to continue into the future (Wimmer & Muni, 2012). According to Davis & Baldwin (2005), the re-branding process may involve the change of brand identity, without changing the colour palette or the name. this is especially practical in brands that consumers have a solid emotional connection as well as strong credibility with the current brand identity. Therefore, the level of rebranding changes will depend on the repositioning that a company desires. However, companies should be cautious not to attract bad press from such processes. This is because fundamental changes in a brand or refreshing the brand may be risky especially for high profile organizations as the stakeholder may see it as unnecessary wastage of resources. Rebranding will certainly have a considerable impact on brand value, and this must be communicated well to stakeholders to ensure the success of the process. For instance, explaining the process to the company’s employees is important because as they become the best publicists for the process. Challenges and Opportunities According to Myrick (2012), the rebranding exercise should be conducted when it is required. However, a company should realize using an earlier branding development process because of its success will not eliminate challenges. This is because the rebranding process will be conducted under a different market environment. Firstly, the consumers usually have existing perceptions on the existing brand. Therefore, these perceptions should be addressed preferably with a top-down approach to ensure the company’s staff support the rebranding strategy. If the existing brand is well-established, then the process may take some months. Therefore, it will take a well-developed plan and supportive staff to properly implement the strategy. Marketing presents another challenge even for simple rebranding exercises because a company has to create enough buzz and awareness. According to Tai & Chew (2011), a company should completely replace the old concept with a new one in its re-branding process. This is because any voids will give a chance to the competitors to fill the void as well as manipulate the company’s brand. However, the replacement could be problematic because finding a fresh concept that the competitors have not tried out will always be a tall order. Competition Lexus is famous for its reliability. For instance, in a 2012 dependability survey it emerged as the leader, although there was marked improvement from competitors. In the survey, Lexus reported 86 issues in a hundred vehicles against an industry average of 132 issues per a hundred vehicles from an industry pool that included Scion, Cadillac, Porsche, Chrysler, Jaguar, Jeep, and Dodge. The improved performance comes after the great challenges that the industry went through during the global financial crisis. For instance, General Motors and Chrysler went through bankruptcy issues. This has pushed the automobile manufacturers to shift their focus on quality improvement with a view of achieving long-term success (Durbin, 2012). Lexus recently lost its leadership position in the US market. The company’s executives blame the loss on inferior brand image and declining customer loyalty. Although, Lexus records good sales numbers in the luxury brands segment, figures indicate that about one-third of Lexus owners ditch the company for Mercedes and BMW, its major competitors (Iliaifar, 2012). Therefore, to conquer these competitors Lexus must detach itself from the Toyota brand and avoid the tag of an ‘upgraded Toyota’. This will translate into a characteristic brand that consumers will want to associate with. Selecting a Suitable Branding Agency and Implementation Although the business environment changes fast, the process of creating the desirable brand is often quite slow and complex. Therefore, it essential to engage a branding agency that has the right technology and solutions to produce desirable results in the shortest time. This should be combined by the ability to perform the various tasks. For instance, an agency that creates brand systems in a week and conducts brand education to the company staff on a weekly basis would be the best bet. However, the agency should involve the company’s decision makers for them to identify, evaluate and decide on the brand results, but should retain the capacity to determine the best ideas that support an organization’s vision and values. Finally, the agency should have a long-standing run of past successes with such processes (Trehan & Trehan, 2008). For this rebranding exercise, Lexus will hire Team One as its branding agency. First, the two firms already enjoy a successful working relationship. Team One was instrumental in the creation of the #LexusInstaFilm, which was a stop-motion film created from Instagram photos. The advertising agency organized the project where each participant contributed one photo on a specific hashtag that enabled Lexus and Team One to sequence the photos in the developing a film to endorse the 2014 Lexus IS (Team One, 2013). Furthermore, the agency has worked with other luxury brands such as the Marriott Hotels. Part II Rebranding Plan Client/Brand: Lexus Date: 2013 Project: Re-Branding Job no: 1 Brief writer: Team One Budget: $10,000,000 1.1.1.1.1 Objective/goal Branding brief Objectives: Development of a distinctive and characteristic brand image that luxury automobile users can identify with Reposition its image as a reliable and a dependable brand to increase customer loyalty Critical success factors: Identification of dedicated employees besides the Toyota design team and their involvement in the design process to ensure full commitment to the exercise from the company’s employees Determine the relevant stakeholders and consult them at every stage as need arises Engage the services of a reputable branding agency (Team One) to ensure the smooth running of the exercise as well as effective monitoring and evaluation Provide sustained and consistent communication through different channels i.e. print and broadcast media, online-websites and social media, billboards, dealerships partnerships. Evaluate our capacities and put in place superior plans. Formulation of contingency plans is necessary to avert possible crises Continuous monitoring and appraisal process at each stage Success Measurements: Budget and the Implementation timetable 1.1.1.1.2 Positioning – Write down your company’s elevator pitch Branding brief Consumer demand for luxury automobiles always survives cyclical slumps, and often experience sizeable growth after the downturns. The increased competition among automobile manufacturers demands that they must not only focus on profitability and sales but also on service and quality. Furthermore, the increased pressure for environmental protection and vehicles with reduced fuel consumption has not spared the luxury segment. Therefore, the automakers must improve on their innovativeness (ILO, 1992). Lexus is a luxury vehicle brand of the Japanese Toyota Motor Company. The brand is marketed in over 70 countries in the world and is among the largest global brands originating from Japan. The brand’s global expansion has seen it increase sales in the United States, South East Asia, Europe and Latin America. The vehicles conform to different regional powertrain configurations and model specifications. 1.1.1.1.3 Current/desired positioning/brand image Branding brief Brand’s current/desired positioning: Lexus designs sedans, SUVs, convertibles, sports cars and hybrids and is the fastest growing luxury automobile brand globally. Brand’s current/desired image: Lexus is deemed the most reliable and dependable luxury vehicle 1.1.1.1.4 Target audience Branding brief Lexus targets high-end consumers. The luxury brand strives to maintain its target market by avoiding releasing many models in the market and offering staggered pricing. The company uses print and broadcast media targeted at this niche market an d associates its brand with quality and safety yhrough its marketing program (Young & Aitken, 2007). 1.1.1.1.5 Competitors Branding brief BMW is a German automaker started in 1916, which forms the “German Big 3” luxury automobile manufacturers alongside Mercedes Benz and Audi. Apart from its wide range of sports cars, sedans, SUVs, SAVs and hatchbacks it also produces luxury motorcycles and formula one cars. Mercedes Benz is also a German luxury automaker, which is a division of Daimler AG. The company, which has its headquarters in Stuttgart, also produces trucks, coaches and buses. Mercedes Benz uses “Best or Nothing” as its slogan. The company has had to stop the production of its Maybach brand due to poor sales. 1.1.1.1.6 Company values Branding brief Lexus has distinct brand values from its parent company Toyota (Lexus, n.d.). The brand values are: Essence: The brand assists its user pursue perfection Promise: The brand assures its users luxury that will assist them to enjoy every moment Benefits: The brand promises various benefits in sensory immersion, personal and individualized experiences and time & memorable moments Personality: In its inspired, caring and self-assured manner, it develops Impressive, Dynamic, Elegant, Advanced and Lasting (IDEAL) products. 1.1.1.1.7 Brand promotion Branding brief The company and Time One agency will conduct internal and external promotions for the rebranding process. The company wishes to use effective communication channels targeting the Lexus employees to make sure that it builds enough support from its internal ranks. The communication will then shift to the consumers through print and broadcast media, dealerships and online platforms that target high-end consumers. Budget $10,000,000 The costs include research costs, marketing costs, costs for hiring a branding agency, makeovers on physical signs, training costs, and implementation costs. 1.2 APPROVAL Name Date Name Date 2 Work Plan Week Activity 1&2&3 4 5&6 7&8&9 10&11 12&13 14&15 16 17 Monitoring and evaluation Proposal Formulation Research and Data Collection and Analysis Final Proposal Preparation Approval by Management Board Internal employees sensitization Implementation Marketing to External Consumers Bibliography Ciferri, L., 2013. Luxury big 3 fight for sales, prestige, profits. [Online] Available at: http://www.autonews.com/article/20130401/OEM01/304019997/luxury-big-3-fight-for-sales-prestige-profits#axzz2mglARC4e [Accessed 6 Dec 2013]. Durbin, D.-A., 2012. Lexus tops reliability list among improving competitors. [Online] Available at: http://www.manufacturing.net/news/2012/02/lexus-tops-reliability-list-among-improving-competitors [Accessed 6 Dec 2013]. Iliaifar, A., 2012. Lexus distances itself from Toyota in order to regain luxury throne. [Online] Available at: http://www.digitaltrends.com/cars/lexus-distances-itself-from-toyota-in-order-to-regain-luxury-throne/ [Accessed 8 Dec 2013]. ILO, 1992. Employment and working conditions and competitiveness in the leather and footwear industry, Geneva: International Labour Office. Team One, 2013. The first collaboratively film created film using Instagram photos. [Online] Available at: http://teamone-usa.com/2013/07/the-first-collaboratively-created-film-using-instagram-photos/ [Accessed 6 Dec 2013]. Trehan, M. & Trehan, R., 2008. Advertising and Sales Management. s.l.:V K Publications. Wimmer, E. & Muni, A., 2012. Moving the future: VWa nd Toyota vying for pole position. New York: Palgrave MacMillan. Young, A. & Aitken, L., 2007. Profitable marketing communications, London: Kogan Page Limited. Balmer, J. M. T., Mukherjee, A., Greyser, S. A. & Jenster, P., 2005. Corporate Marketing: Insights and Integration drawn from corporate branding, corporate identity, corporate communication and visual identification. Bradford, England: Emerald Group Publishing. Bedbury, S., 2003. A new brand world: 8 principles for achieving brand leadership in the 21st century. New York: Penguin. Ciferri, L., 2013. Luxury big 3 fight for sales, prestige, profits. [Online] Available at: http://www.autonews.com/article/20130401/OEM01/304019997/luxury-big-3-fight-for-sales-prestige-profits#axzz2mglARC4e [Accessed 6 Dec 2013]. Davis, M. & Baldwin, J., 2005. More than a name: An introduction to branding. Lausanne: AVA. Durbin, D.-A., 2012. Lexus tops reliability list among improving competitors. [Online] Available at: http://www.manufacturing.net/news/2012/02/lexus-tops-reliability-list-among-improving-competitors [Accessed 6 Dec 2013]. Iliaifar, A., 2012. Lexus distances itself from Toyota in order to regain luxury throne. [Online] Available at: http://www.digitaltrends.com/cars/lexus-distances-itself-from-toyota-in-order-to-regain-luxury-throne/ [Accessed 8 Dec 2013]. ILO, 1992. Employment and working conditions and competitiveness in the leather and footwear industry, Geneva: International Labour Office. Lexus, n.d.. Lexus Brand Guidelines. [Online] Available at: http://images.mileone.com/Matt/mwlogos/Lexus/LexusBrandGuideline.pdf [Accessed 6 Dec 2013]. Myrick, R., 2012. Running a food truck for dummies. Hoboken: John Wiley & Sons. Sarkar, S., 2011. Conceptualizing Rebranding. International Journal of Strategic Organization & Behavioural Science, 1(1), pp. 20-25. Tai, J. & Chew, W., 2011. B2B: 10 rules to transform your business into a brand. Singapore: Marshall Cavendish Business. Team One, 2013. The first collaboratively film created film using Instagram photos. [Online] Available at: http://teamone-usa.com/2013/07/the-first-collaboratively-created-film-using-instagram-photos/ [Accessed 6 Dec 2013]. Trehan, M. & Trehan, R., 2008. Advertising and Sales Management. s.l.:V K Publications. Wimmer, E. & Muni, A., 2012. Moving the future: VWa nd Toyota vying for pole position. New York: Palgrave MacMillan. Young, A. & Aitken, L., 2007. Profitable marketing communications, London: Kogan Page Limited. Read More