Lexus Disrupts…Itself

The brand that changed the luxury automotive game in 1989 is at it again, expanding beyond its baby boomer core to a younger, more experientially minded buyer

August 21, 2019
Pushing the Reset Button -- The stunning LF-LC concept vehicle, revealed at the North American International Auto Show in Detroit in 2012, marked a clear departure in Lexus' design and engineering direction. It would serve as the inspiration for the LC 500 that made its debut in 2015.

When Lexus burst on the scene in 1989, it was a market disruptor — long before the rise of the internet popularized the term. Thirty years later, the label still applies.

The difference? Lexus’ appeal now expands beyond its core — baby boomers in search of luxury — to customers across a much broader swath of the demographic spectrum. Simply put, today’s Lexus buyer is defined less by age and far more by attitude.
“We refer to it as the ‘experiential master mindset,’” says Michael Moore, Lexus’ senior manager of product marketing. “It’s not about how old you are. It’s about how you see the world and your place in it.”
That wasn’t the case in Lexus’ early days. Back then, the target was more narrowly focused on affluent middle-aged buyers who were open to a vehicle and a brand that redefined luxury. The high-performing LS 400 sedan and Lexus dealers’ commitment to treating their customers as if they were guests in their home ticked both of those boxes. It was a potent combination that, for many, trumped the heritage and status of a Mercedes-Benz or a BMW. Before long, those established brands had no choice but to change in hopes of keeping up.
Packs a Punch -- Lexus pushed the performance envelope even further with this year's launch of the limited-run RC F Track Edition. It's 5.0-liter V-8 engine cranks out 472 horsepower and can propel this coupe from 0-60 mph in less than four secconds.

In Search of its Soul

This disruptor persona served Lexus well as it grew to become the best-selling luxury make in America. But in 2011, it became clear to TMC President Akio Toyoda that the brand needed to double down and disrupt — itself.
“Akio was at a media event in Pebble Beach (California) where we were introducing the 2012 GS,” says Moore. “I was with him in one of the test cars, along with the chief engineer. I recall how he thought that this vehicle was different in terms of driving dynamics than those Lexus had come out with before, that it offered a more emotional appeal. But afterwards, several journalists came up to Akio and told him they thought Lexus had lost its way, that its vehicles lacked a soul. That really disturbed him. He knew the GS would be part of that change, but that Lexus needed to go even further.
“Soon after he gave the green light to make the LF-LC concept that became the inspiration for the LC. I really think that moment was a turning point, a catalyst if you will, that led to a fundamental shift in the brand.”
The LC 500 might represent the epitome of this shift, but it’s far from alone. For example, the IS sports sedan — now in its fourth generation — attracts the youngest buyers in the luxury automotive segment. Another prime example: the RC Track Edition, added to the lineup earlier this year. Back in 2011, who could have imagined that Lexus would offer such an unabashedly performance-first vehicle?
“This shift has been driven by Akio’s vision and leadership,” says Moore. “He makes sure every vehicle Lexus develops delivers a high level of emotional engagement for our guests. He’s a master driver who gets behind the wheel of every vehicle at the prototype stage. If it doesn’t measure up to his standards, it doesn’t go on sale until the necessary changes are made.”
Customers have taken notice, helping to expand the age range of Lexus’ customer base. And what about those automotive journalists who confronted Akio back in 2011?
“They see it and recognize it, too,” says Moore. “Check out the reviews of not only the LC or the RC Track Edition but also products like our new LS and the new ES F Sport. They’ve acknowledged the dramatic shift from where we were.”
Millennial Marketing -- Earlier this year, Lexus collaborated with street wear designer John Elliott to create tires for the UX inspired by his special edition Nike Air Force 1 shoes. The tires made headlines when they were unboxed during Elliott's runway show in New York City. Lexus promoted the connection via social media, digitial platforms and with key influencers. This is one of many innovative marketing approaches that are helping to expand the Lexus brand.

A Marketing Shift, Too
Mary Jane Kroll, media manager for the Lexus brand, says the move to more emotionally engaging vehicles has led Lexus Marketing to track different metrics in addition to the traditional measures of quality, durability and reliability. One example of this is “worth the premium,” which goes beyond the conventional concept of value for the dollar.
“For instance, the list price for the LC is $98,000, but it rates very high on the ‘worth the premium’ scale,” adds Moore. “Luxury customers say it delivers the same ownership experience as, say, an Aston Martin that’s double the price. In other words, these extremely discriminating buyers are telling us that — when they set aside the rational reasons for buying a specific vehicle — they believe the Lexus brand is worthy of their desire. It’s a clear sign that the brand shift is taking hold.”
While the shift starts with product, but it doesn’t stop there. Kroll points out that, increasingly, customers are spending more and more time shopping for a vehicle online rather than in dealerships. So Lexus is taking steps to ensure customers’ experiences interacting with it and its dealers’ websites and social media channels are in sync with those of its vehicles.
The same dynamic applies to media buying. Placing ads on broadcast and cable TV aren’t going away any time soon. Those baby boomers, still Lexus’ core customer, continue to rely on those delivery mechanisms for news, sports and entertainment. But they’re no longer enough on their own.
“To find and reach new luxury buyers in a more nuanced and layered way, we’re going beyond linear media and establishing a presence on such platforms as podcasts, streaming services like Roku, Hulu and Netflix and social media,” says Kroll. “The advantage of these fast-growing channels is that we have the ability to be very precise in where and how we reach potential consumers. For example, Hulu and other streaming TV partners add incremental reach from light TV viewers — and cord-cutters — to Lexus media plans. On Netflix, which isn’t ad supported, product placement is the way in.  There’s just been this insanely rapid proliferation of media and all of us consuming more content in more ways than we used to. Lexus needs to keep pace, if not be out in front of our competitors.”
Perhaps no other Lexus vehicle demonstrates this change than the all-new UX crossover that hit dealership showrooms at the end of 2018. While this vehicle was developed with Millennials primarily in mind, Kroll says it also appeals to empty nesters who’ve sent their last child off to college and have relocated to a more urban setting.
“On one hand, the UX is attracting the attention of what we call ‘urban explorers’ with a median age of 38 — the youngest of any customer we’ve ever targeted,” she says. “But we’ve found that it also fits the needs of older customers who’ve moved back into the city. It’s not a matter of one or the other, but both. To maintain and grow our success as a brand we need to remain the choice of our loyal consumers and, also attract the next generation.”
The result?  A media strategy designed to reach both ends of the spectrum.
By Dan Miller

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