EXECUTIVE SUMMARY

Lexus Automobile Company has one of the leading marketing programs of any automobile manufacturer. Lexus has used many marketing strategies to deploy key characteristics into the minds of the public. They use the following tag line that adheres to the Lexus company mission and goal, "The Relentless Pursuit of Perfection". Lexus wants their consumers to know that they are always being proactive with regard to safety standards and product quality. They lead the industry in the many new safety standards they have employed before any other manufacturer and boast of this by using it in many of their advertisements. They brag of the many years they are ahead of all Federal safety standards and regulations proving their seriousness to the cause. J.D. Power and Associates ranked Lexus as the 'Best Overall Car Line' seventeen times out of twenty four consumer reports since 1990.

Lexus uses many marketing strategies to retain their prestigious position as a leader in the luxury car market. In order to achieve this market position, they avoid flooding the market with many models and attempts to reach all higher-end consumers with their staggered pricing. Instead they focus on what they do best and try to target the niche they have dominated in the past seven years. In fact, Lexus only makes six models in the new 1997 line, including a new sport utility vehicle. The use of print advertising in varied magazines target people with higher income levels including those who may read Forbes and Fortune magazines. They also attempt to target their television ads toward the same upper income level viewers and focus on time slots with related programming like network news and golf classics. Lexus has marketed its name synonymous with safety and quality and has achieved success through an aggressive and first class marketing program backed by a quality product. These elements have successfully carved their leading position in the luxury car market.

PRODUCT

With over forty years of experience with Toyota, the Lexus Automobile Corporation understands and fills the need in the marketplace for a luxury vehicle. Lexus auto makers have secured a market niche that satisfies those consumers who can afford a luxury car, yet at the same time they demand performance. These vehicles have been described to posses an "ergonomic design" feature defined as, "the relationship of people to machine, particularly the location and ease of use of controls, instruments, switches, pedals, and steering wheel"(www, cited) right where they are supposed to be to make them user friendly and provide creature comforts while driving.

Starting from the basic model, ES300, to the new Lexus Coupe 400, these vehicles display luxury in countless aspects. The sporty shape, leather trim, four independent wheel suspension, and an anti-lock braking system (ABS) make even the lower-end model extremely safe and comfortable. At the Lexus high-end, the 400 Coupe includes additional features such as; High Intensity Discharge headlights (HID) which help increase visibility at night and blocks glare from on-coming headlights and also a satellite-aided computerized Global Positioning System (electronics illustrating your road position and assisting the driver to their destination), and finally the driver has the option of a touch-screen display which have, "directionals for the operation of the audio system, heating and air conditioning controls." (www.cited) Additional options include; a six-disc CD changer mounted in the glove compartment (which can fit a personal notebook computer), power windows, and a sunroof with a "safety pinch sensor". All these features are designed for those who seek comfort and ease of operation in a luxury car.

The performance side of Lexus can clearly be illustrated when compared to other luxury vehicles. Although the ES300 is not known for its handling as is the 1997 Catera, the 1997 ES300 with its only 24 valves and V-6 engin has as much horse power as the Cadillac Catera. Moreover, the new 1997 Lexus Coupe with its 32 valves and V-8 engine has even more power and a better level of fuel efficiency. It is this kind of efficiency which leads to thousands of satisfied young-at-heart drivers seeking performance in a luxury vehicle annually.

Overall, owning a Lexus is not just enjoying the high performance of a luxury vehicle; it is the satisfaction of achievement by each individual owner --- a status symbol. Total satisfaction is continued even after the sale with the services that are provided by each Lexus dealer and service department through the Lexus philosophy of customer satisfaction through the quality of the product. According the IntelliChoice, a car rating publisher, Lexus has an excellent overall Ownership Cost Rating and Repair Cost Rating, as well as one of the top resale values in the automobile world. All together, it is a product that makes Lexus drivers proud to own an exceptional vehicle in its class.

PRICE

The cost and pricing which Lexus has come to the market with is targeted for the high-end consumer in the range of $29,900 to $52,900 purchase price. Within the market Lexus Corporation has attempted to target those seeking luxury, quality and safety standards beyond an ordinary automobile. Lexus touts on their ability to offer an exceptional product combined with exceptional safety and relative affordability to the upper-crust of the consumer market.

In the Autumn of 1996, Toyota Corporation (of which Lexus is a division of), announced that they will be lowering the list price not only on Toyota cars but also Lexus automobiles. The 1997 Lexus 'entry-level' model of the ES300 will start at $29,900 which is down from the 1996 list price of $32,400, a reduction of $2,500, to entice those on the fringe to re-examine the luxury car. With the recent four-wheel-drive introductory model the LX450 and top-end luxury Coupe LS400, prices will slightly increase (1%), due to their popularity. By lowering the prices on the Lexus base model, Japanese owners are poised to make more money with the falling Yen to the American dollar. Lexus and Toyota Corp. was able to cut costs mainly with the number of parts required which led to the reduction of assembly time, where most of the savings came in.

The main competitor in the ES300 class, is the newest model by Cadillac, the Catera which touts its handling ability on the road. And although the Lexus is not known for it's road management, it is known for the rich features in both safety and luxury. As quoted by a Lexus spokesperson, "I just think that we are looking for ways to make a better value but at the sane time improve the vehicle as a whole." This certainly reiterates Lexus' slogan and mission of "The Relentless pursuit of Perfection".

Average Tax & Fees: Forty-seven of fifty states impose sales taxes on vehicles ranging from 1.5% to 8.6%. Additionally, most states have annual registration fees which are initiated at the time of purchase and paid upon delivery of the auto.

Luxury Tax: The Federal government imposed a luxury tax in 1991 for those autos which exceeded $34,000 in price (excluding those weighing over 6000 lbs.) For those who own luxury cars they are penalized an additional 10% on amounts exceeding $34,000.

PLACE

Following with the same theme of excellence in engineering, Lexus places equal importance on product placement. In the greater Seattle area Lexus dealerships can be found in Bellevue and Lynnwood. These locations are strategically located on prime real-estate, and the way that they place their product reaffirms their concept of catering to the very affluent. The dealerships are never located in any run down areas, they are found only in neighborhoods of the people who are being targeted.

From the moment you first see a Lexus dealership, the experience is very grand. The property is not completely paved over, like most car lots. This is the very first image that you have of Lexus as you pass by. The grass is flawlessly cut and the shrubbery is elegant and perfectly trimmed. The Lexus sign is rich with dark colors with gold lettering to give it an opulent appearance. The buildings look less like a car dealerships, and more like an office building of some sort. You then see the automobiles gathered around in very showy positions about the campus. Nothing has been overlooked here. Driving around the perimeter of the store confirmed that the entire area was well taken care of and not a scrap of litter could be found on the pavement.

On the inside of the dealership the theme continued. The lighting is dim and beautiful rugs were on the floor. A brand new Lexus automobile was situated in the center of the showroom as if it were a grand piano. Mature looking adults were roaming about with a seemingly smug attitude, and trying quite hard to uphold the image of the manufacturer. Business dealings are probably going on upstairs, because you cannot hear anyone bargaining or arguing. The parts and maintenance counter is situated on the opposite side of the building, conveniently out of sight, and all of the staff of this area was decked out in uniforms which looked freshly pressed.

Lexus takes quite seriously the image that is being cultivated on their car lots. The stage is set and the wealthy atmosphere is detailed and tended to in every way possible. Any slip ups here, could have negative effects on the psyche of the potential customer. An air of elegance and refinement is evident and reflects the marketing strategy that the company is devoted to.

PROMOTION

The luxury car market as a whole is a very challenging group to advertise to. Only 9% of all cars sold in today's marketplace are luxury vehicles. This makes the luxury car advertising through such media such as TV and magazines, inherently tricky. Luxury car advertising does not necessarily reach the intended target, as in this case, the upper-class. The way Lexus avoids such problems is by identifying their prospects through their owner/client base. When Lexus is able to identify their prospects accurately, high costs in advertising can be justified because they know they are precisely targeting their potential customers.

The key to Lexus' promotional success is their personal attention to detail when analyzing their market. Just as their catch phrase states, Lexus is in, "The relentless Pursuit of Perfection," much evidence proves that they do relentlessly try to be perfect in their promotional campaigns. Many market analysts have found that when a Lexus buyer purchases an automobile they feel as if they have just signed into an elite club car club; and Lexus strives for this type of customer emotion. Lexus spends countless dollars in its efforts to keep their buyers happy even after they have purchase the vehicle. Lexus concentrates greatly on retaining their customers in order for repeat business, this tactic also leads to referral advertising. Lexus' customer clientele has proven to be very loyal one with a 65% rate of repurchase by current Lexus owners.

The way Lexus builds such a loyal customer base is by making their buyers feel as though they are in an exclusive club. When a new model is introduced they make sure all of those who have purchased before, know of their unveiling prior to the national ad campaign. This allows their current buyers to build up anticipation for their new product and to be more cognoscente of the TV commercials and magazine advertisements.

Lexus is very innovative with the use of the Internet as a tool to reach prospective customers. In October,1996, Lexus was one of the first companies to launch a brilliant new project to e-mail potential customers who visited their web page. Their web site which is WWW.LEXUS.COM, has many exciting features for the Lexus admirer. Lexus' web site features high-end graphics of their cars and detailed specifications. The most interesting property of their web site is a virtual test drive where you can experience what its like to be inside a moving Lexus by seeing detailed graphics flash on your screen.

Beside using the Internet, Lexus reaches their loyal clientele in a variety of other ways too. Lexus is a prime sponsor for many major events such as athletics and art/cultural events. They target their advertising to reach the high-end buyer; some examples of their sponsorship are; the Raymond Floyd Golf Tournament and such fund-raisers as the Musicians' Pension Fund held just prior to the Grammy Awards. Events such as these, alongside their powerful television and magazine advertising, boosts their name recognition to that higher-end of consumer. In order for their messages to be introduced to their precise market Lexus often prints advertising in magazines such as Golf Digest, Golf Illustrated, Kiplinger's Pers Financial, US News and World Report, and even Readers' Digest. These specific magazines reach a large portion of the target market segment of Lexus buyers.

The most effective part of Lexus' promotional strategy are their elegantly subtle advertising. Their very first campaign featured their famous catch phrase "The Relentless Pursuit of Perfection." The car commercials for this campaign featured stylish dark images of their cars roaming through elegant streets while a narrator voiced simple messages about their cars as being the worlds finest in engineering and craftsmanship. Lexus' most recent ad campaign features much of the subtleties and class of the initial ones, yet with a more aggressive use of glamour. Actors such as Kelsey Grammar (from the show Fraser), Jeremy Irons, Charlton Heston, and even Demi Moore are featured in short commercial spots for Lexus on various locations around the globe. The effectiveness of Lexus' ad campaigns are due to the extensive market research they conduct. Analysts study exactly what the Lexus buyer watches on television and materials those consumers read and then they direct their in depth campaign out to those perspective targets.

Lexus combines many different methods of media to reach their potential buyers. They reach far and wide to make sure that everyone who is interested in knowing about the benefits of Lexus cars, receive promotional information. Lexus has targeted the upper-class buyer and competes heavily with European car makers such as Mercedes and BMW for; not only television air time and print advertising space but primarily for customers. Lexus' aggressive promotional tactics are a primary part of why they are such a popular and profitable luxury automobile company.