Scion, the new car marque from Toyota Motor Sales (TMS), U.S.A., Inc, will sell its first two production models, xA and xB, in approximately 105 California dealership showrooms beginning in June. The Scion brand was created to suit the demands of an emerging culture of new car buyers.

“Scion’s target buyer is information rich, time poor and highly technology savvy,” said Jim Farley, vice president, Scion. “Scion will cater to this influential generation with unique products, a distinctive dealership environment and a revolutionized sales process, all complemented by an astonishing sticker price.”

The Products

Scion’s products will all share three key characteristics: style, versatility and surprise. The long-term styling goal focuses on vehicles that are expressive, but subtle. Versatility can be found in the numerous combinations of passenger and cargo configurations. The element of surprise is seen in the high-quality materials and the long list of standard equipment.
Simplicity is important to Scion’s key buyers, and the extensive standard specifications list was derived with this key objective in mind. Both the xA and xB are mono-spec vehicles, with side and side curtain airbags for xA as the only factory option. As a result of this approach, a customer must only make a few key choices when purchasing a Scion: transmission, color and accessories.

In addition to wheel covers and audio, Scion has developed approximately 40 accessories for each vehicle that will be covered under the standard Scion limited warranty of three years or 36,000 miles, whichever comes first. Consumers can choose from a wide array of appearance enhancements and even underhood items, such as cold air intake or strut tower brace. The aftermarket will weigh in with a wide variety of items like superchargers and lowering kits.
“We’ve worked with SEMA (Specialty Equipment Manufacturers’ Association) to transfer technology from Toyota’s development side to aftermarket manufacturers who want to develop products for Scion vehicles,” said Brian Bolain, national sales promotions manager, Scion. “This is the first time that Toyota has shared proprietary technical information outside the organization, and we look forward to great results.”

The Dealer and Process

Scion’s target market made it clear that they want a dealer involved with the sales transaction. To them, the dealer represents credibility for the brand and the sales process, but they want a different relationship with the salesperson. Target buyers point to timeliness, simplicity and comfort level as the three essentials in a sales experience.

“We looked at the traditional process, talked with Gen Y and identified improvements to three key processes - information-gathering, inventory management and the retail experience,” explained Farley.
Scion.com and the dealership showroom let customers explore at their leisure and draw their own conclusions. Scion inventory management utilizes a pull philosophy rather than the traditional push method. This customer-driven approach will help ensure that the right car is matched to the right customer. Research showed that although Gen Y wants a more timely transaction, most are willing to wait about a week for their custom-built car. By using a pooled inventory approach, dealers will be able to get the car they need, equipped the way their customer wants, in about a week.

Each Scion dealer will undergo extensive training beginning later this month to learn more about this unique target audience and how to provide a sales process tailored to their needs. In addition to the normal two-day off-site product training, each dealership will participate in six days of customized, in-dealership education.

The Scion Covenant, key standards that focus on improving the customer experience through sales and marketing, and image and facilities, will be introduced across all dealerships, but how it is applied will be customized for each retailer.

The Dealer Showroom

The Scion dealership environment caters to buyers who want the resources to answer their questions, but who also need the freedom to explore at their own pace. The Scion showroom accomplishes this through three key areas, each with a specific focus:
* The product area includes highlights of the vehicles’ features on 50-inch plasma screens, several accessory display cases, freestanding paint and fabric selector stands and, in many showrooms, a Scion vehicle customized with accessories.
* The discovery zone is supported by self-service Internet kiosks and printer stands, where users can log onto the Scion Web site, simulate customization of their chosen vehicle, including installation of the approximately 40 accessories, and then save or print out the data for reference. This streamlines the purchase process and facilitates a more personalized shopping experience.

* Finally, the consultation space involves a certified Scion sales staff that will offer assistance and guidance for shoppers who have any additional questions.
In California, about 65 percent of our dealers will install the showroom within their current dealership. The rest will either expand their showroom or have a separate facility.

“Scion is more than just product. We believe that by reflecting the buyers’ expectations for consistency between Scion.com and the dealership, and ensuring transparency and time efficiency, we will make an emotional connection at the dealership,” continued Farley. “This connection translates into a lifetime advocacy for our retailers and for us as a manufacturer.”

The Pure Price Solution

The Scion “Pure Price” solution is a way to meet the buyers’ desire for consistency and transparency. It means that the dealership’s advertised price equals the actual transaction price. This principle should apply to accessories, finance and insurance.
This “Pure Price” is supported by base Manufacturer Suggested Retail Prices (MSRP) of $12,480 for xA and $13,680 for xB. The xA and xB, equipped with automatic transmissions, are $13,280 and $14,480, respectively. These prices acknowledge our target’s budget while giving them an unprecedented level of value.

The Market

Gen Y is emerging as a tremendous force in the marketplace and will eventually rival the Baby Boomers for dominance. By 2010, Gen Y will account for roughly 25 percent of the Light Vehicle Market. In 2020, they will account for 40 percent of the market, resulting in 6.5 million units in a 16-million-unit market, a number that no manufacturer can afford to ignore.
Gen Y values emotional attributes in addition to rational elements often coveted by Boomers. It is critical that Gen Y buyers be allowed to discover things, like new brands, at their own pace. They also demand authenticity - things need to be “real.” And finally, they treasure their relationships with family and friends and have a strong sense of community.

One segment of Gen Y is comprised of trend-leaders, or people who like variety and who are not afraid to try new things. More importantly to an automaker, these are the people who believe that their vehicle is more than a form of transportation - it’s an expression of their individuality.
This trend-leader population is just part of the Gen Y market and accounts for about 15 percent of the overall generation, or about 10 million consumers by 2010. Scion will target this sub-segment and focus on passenger cars, while Toyota will continue to target more mainstream youth.

The projected Scion buyer profile will reflect a median age in the very low 30s, about 40 percent male and single, approximately 30 percent college-educated, and just over a third with children under 18. Their household income should approach $50,000. Most importantly, their profile will also include psychographic elements such as intelligence, image-conscious, innovative and influential.
Scion marketing will focus predominantly on males around 22 years old to reach the projected buyer profile. The target will typically be college-educated with an above average income for their age.

The Message and Methods

Scion marketing will have an urban feel and generate awareness among buyers who have a command of their own style. Scion has been and will continue to generate interest and increase awareness through its interactive Scion.com Web site, a hybrid lifestyle/automotive magazine and participation in aftermarket and lifestyle events and shows.

ATTIK, Scion’s advertising agency, conducted several studies last fall, with clear results for Scion’s campaign. Scion’s positioning will focus on the idea of “Driving : Remixed.” Those exact words will not be used, but its meaning reflects changes made to product, sales process and marketing. The message we’ll send is that a customer can configure a Scion to be very individualized. Scion’s tag line is, “what moves you.” This has not only a rational element, given that Scion is a car brand, but an emotional element as well, posing a provocative question to consumers.
Scion’s Web site has been active since March 2002, and now has over 10,000 registered users. This Web site not only serves as an informational portal for consumers, but the demographics of the user base suggest that Scion is attracting its intended target.

The vast majority of Scion.com Web site users are under the age of 35 and male. They’ve demonstrated a strong propensity to participate with Scion’s evolution, evidenced by the rapidity with which they respond to the numerous surveys posted online. Scion.com allows customers to discover the products on their own terms at their own pace. For print, Scion will continue to publish issues of the lifestyle/automotive magazine with constant updates to the information, at least twice annually.
In 2002, Scion was highly visible and active in the aftermarket/tuner segment through events such as Hot Import Nights and Import Revolution. While participation in tuner events is one clear link to a buyer group, Scion’s affiliation with SEMA forms the foundation for involvement with the aftermarket. This is an effort to ensure that Scion buyers will enjoy a wide range of custom products from which to choose.

The Development

The development of the Black Box (bB), the Japan-market predecessor to the current Scion xB, was the foundation for Scion’s xB. The bB was brought to market at half the cost of a normal development project with the elimination of hand-built prototypes prior to start of production. Virtual assembly, virtual crash-testing and pull-ahead production tooling allowed nearly a 50-percent reduction in development costs. Development of the xB began a few months after the launch of the bB.
The development of the xA was folded into the overall developmental program of the Japan-market vehicle called the ist. The xA and xB were designed to anchor the entry-level price position for a line of products that will explore many new directions.

“The xB and xA represent the foundation for a Scion brand of products that will grow and evolve,” said Tetsuya Tada, chief engineer for xA and xB. “To succeed long-term, its products and its process will need to remain outside the business-as-usual-mainstream.”

The Future

The Scion xA and xB will go on sale mid-June exclusively in California. In February 2004, the market will expand to cover the south, southeast and east coast. A few short months later, Scion will simultaneously complete the national rollout and launch the third Scion vehicle, which will be stylish, sleek and sporty. This staggered rollout allows sufficient time for ramp-up of production and further refinement of Scion’s new distribution and sales processes.
Participation in the aftermarket forum is essential for awareness of the products and their personalization potential. Scion will continue to appear in tuner events such as Hot Import Nights and Import Revolution. Scion will debut newly modified vehicles at this year’s International Auto Salon in Los Angeles in April and again at the SEMA show in Las Vegas in November.

Scion will continue to focus on a marketing approach that is experiential, with high quality consumer interaction. For example, consumer drive programs allow consumers to experience the cars in a non-threatening environment. The ride-and-drive events, which were so successful in Los Angeles and San Francisco, are scheduled for a more comprehensive California roll-out beginning in April in cities including San Diego, San Jose and Sacramento. The rest of the country will follow later this year. Finally, consumers will have the opportunity to view graffiti artwork on clear, plastic panels that were originally affixed to Scion vehicle exteriors. The artwork will be touring the country later this year.
“Scion is not Toyota’s youth strategy. It is a vital and important part of it,” said Farley. “Scion is a laboratory for change and innovation that will continue to explore new ways to stay relevant and spark the interest of this new generation for many years to come. And finally, Scion will be imitated. Our competitors will quickly realize that the real risk is to do nothing.”