Lexus NXTable of ContentsPages1. Executive Summary ……….docx

Lexus NX
Table of Contents
Pages
1. Executive Summary
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2. Lexus NX Description
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3. Company Description: Lexus and Strategy
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4. Description and Analysis of the Crossover Trends
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4a. Current and emerging market trends impacting the NX
………………………
4b. Opportunities for
NX……………………………………………………………
4c. Threats to
CUV…………………………………………………………………
5. Description and Analysis of the Industry Dynamics
……………………………………......
6. Competition Description and Analysis
………………………………………………............
7. SWOT Table and Analysis
………………………………………………………………….
8. Segmentation

………………………………………………………………...
8a. Benefit ……………………………………………
8b. Criteria ………………………………………………
8c. Targeting ………………………………………………………
9. Lexus positioning
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...
9a. Positioning Statement …………………………………
10. Marketing Mix
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…..
11. Marketing Metrics
…………………………………………………………………………
12. Competitor Reactions
……………………………………………………………………
1. Executive Summary
2.
This section explores the Lexus NX, one of the most
recent brands developed by Lexus in the CUV (crossover utility
vehicle) sector. While the CUVs have become incredibly
popular with the driving public, it becomes evident that the
majority of OEMs (original equipment manufacturers) want to
be considered a serious competitor in the premium end of the
market (Allen, 2014). Takeaki Kato, an engineer in charge of
the development of the Lexus NX, stated that for Lexus NX,
"the design team produced a concept that pushed engineering so

that we could have a vehicle that drives as good as it looks"
(Vasilash, 2014, p. 18). Kato has been seeking to develop a car
that was not merely a utility vehicle accompanied with high
indicators of comfort, functionality, and higher H-points, but
something that has more performance inside rather than
engineer's previous advancements in sedan designs (Vasilash,
2014). Keeping that in mind, the Lexus NX was initially
planned to be released in North America, but since the risk of
entering the market with a completely new vehicle was a risky
endeavor, the car was released in Europe and Asia focusing to
increase its profile there as well (Allen, 2014).
The Lexus NX product line, being "conceived with an exciting
cutting-edge design, featuring amazing technologies and
premium attributes" (Caribbean Business Staff, 2015, p. 46)
lists several designs with some unique features for each one.
The NX 200T version is a 4-cylinder, 2.0-liter bi-turbo engine
that yields 235 horsepower, and a six-speed automatic
transmission supplied with the front-wheel drive. The NX 200T
Sport is similar to the previous model but has an adjusted
design that better fits body hold in sports suspension. The
innovativeness of the interior and exterior design is best
realized in NX 300h, which is a hybrid car combining a 2.5-litre
Atkinson cycle gasoline engine with an electric motor excluding
diesel option. The system provides a total output of
14SkW/270Nm but it is the fuel economy and emissions figures
that are being emphasized by the producer (Allen, 2014).
The exclusiveness of NX interiors is capitalized through the
HMI (human-machine interface), which is positioned by Lexus
manufacturer as the brand identity. The Lexus NX HMI system
includes a new touch control, which replaces the former
joystick on other models, known as Remote Touch (Caribbean
Business Staff, 2015).
Lexus NX has been developed keeping in mind the following
market tastes identified by Toyota researchers. First, it was
identified that young American consumers, which are the target
market for the Lexus NX, prefer vehicles developed in Europe

due to the higher reliability index (Allen, 2014). Second, as
Allen (2014) cited Kato's comments on the subject, "younger
generation of crossover CUV customers bought smaller versions
was because they expect them to have better fuel consumption
and better handling" (p.11). Additionally, Lexus has always
been perceived as a luxury brand, thus always offering
exclusive and unique product, which was certainly realized
through the introduction of HMI in the Lexus NX. Finally, a
hybrid car which is the case for NX 300h is equipped with an
electric motor that is a reaction over the emerging trend of
using electric cars. As the majority of countries worldwide still
lack the sufficient infrastructure to serve the need of consumers
for electric power, the hybrid design is a perfect solution
addressing that issue.
Consumers are more likely to purchase the Lexus NX
since it has a favorable reputation across its target consumer
population on the market, and its design is developed following
the research on consumers need. It is explicitly positioned as a
new product that comprises the need for flexibility and
exclusiveness, thus is expected to be appreciated by HNWIs
(high net worth individuals) and luxury consumer groups.
3.
Lexus is the luxury car division of Toyota Motor Corporation,
which operates across almost all geographies worldwide but has
the most established reputation in North America. Lexus'
current strategy is to grow its luxury line 10 percent annually
for the upcoming 30 years through expansion across North
America, as well as a developed presence in emerging markets
like China. Lexus is focused over the design of vehicles that are
lean in the use of raw materials, fuel and impact on the
environment, in the meantime pushing forward throughout
performance, as well as luxury. This strategic goal is
transformed into the main strength of Lexus in employing the
principle of Variable Valve Timing in developing engines,
which allows optimizing valve's overlap, as well as shifting
manually using console or steering wheel mounted vehicle. The

other asset is electronically controlled breaks that are developed
with respect to the reduction of possible damage in accidents,
integrated with al Lexus' models from the beginning of its
operational activities in the world.
The weakness of Lexus is that its cars have many similarities
with those developed by Toyota, Lexus' parent company. In
marketing terms, this similarity causes lack of prestige and lack
of brand equity, as all Toyota's actions are mistakenly mirrored
on Lexus image, which in its turn causes declines in Lexus'
market shares. For instance, issues with Toyota Camry and
Toyota Land Cruiser associated with heat controllers are
mirrored on Lexus ES and Lexus LX respectively. Such
perception of the product explains why Lexus NX is frequently
called a fancier representation of Toyota RAV-4 (Levin, 2014).
NX, with an oversized spindle grill, embodies Lexus's latest
design language, which, as a matter of taste, has gained
acceptance from many for its imagination and distinctiveness,
and has significantly higher prices that explain the investment
in raw materials and research, but still has a close resemblance
with Toyota, making Lexus' products more oriented towards
luxurious orientated consumers than that of the general
consumers.
The company’s explicit orientation towards the high quality of
service and raw materials reflects on its competitive advantage
over time. Lexus should capitalize further on its strength of
using quality material and keeping on the edge of consumer
service over time through offering innovative solutions based
on changing consumer preferences. With the Lexus NX 300h,
the company is likely to leverage on an opportunity to expand
further into the field of hybrid and concept cars which are still
highly appreciated among luxury consumers. This will also have
to acquire more potential consumers through market
penetration, so the risky endeavor of entering the hybrid car
segment is probably a good start to finding an appropriate
solution for balancing high price and innovative production
technologies. The Lexus company should keep creating its

pathway through innovation, as this is what helped Lexus to
keep its reputation for the last decades in the automotive
industry. However, Lexus management should be concerned
with a high threat of substitutes for its organizational
capacities, as other brands have similar products on the market
now already, which could be a long-term risk if innovation and
response to consumer needs are lost.
As of now Lexus also has a strong reliability reputation among
drivers, this would be their sustainable competitive advantage.
Lexus drivers experience less maintenance issues and incur less
cost over the lifetime of their vehicles compared to brand such
as Mercedes Benz and BMW. Coupled with the constant
innovation Lexus seems to deliver with each model such as the
Lexus NX with its state of the art HMI features. It will be very
difficult for its competitors to mimic Lexus’ constant strides at
achieving excellence.
To summarize, Lexus NX is a feasible advancement in Lexus'
product line that features innovative elements and interior
designs like HMI. This confirms its proactive attitude towards a
key strength of using high-quality raw materials and innovation,
to differ its products from Toyota as its parent company. Lexus
is likely to keep researching other innovations in the automotive
industry to prevent the threat of substitutes and maintain its
competitive advantage on the market.
4.
The growth in the compact-crossover sector is amazing.
These cars offer the raised seating position and higher
sightlines consumers love with the stability and versatility of a
car-based wagon. The crossover segment has enjoyed staggering
growth, with a sales increase that's by far the highest in the
industry, and automakers are still muddling the category with
new contributions such as the Lexus NX. Crossovers are
“vehicles that have SUV-like function and utility, but with a
chassis and drivetrain more similar to a car than a traditional
truck-based SUV” (Ask.Cars.Com, 2015, n.p.). Crossovers have
rapidly dominated and overtook the overall SUV market in the

past decade and are even increasing in market share in the entire
vehicle industry (Madrigal, 2014). Consumers are quickly
flocking to prefer this type of vehicle. For example, Lexus
expects more than 50 percent of NX buyers will be new to the
type (Motorweek, 2015). The luxury compact crossover market
therefore represents an important appendage of the booming
crossover market. As more American consumers switch to
crossovers, many are desiring luxury vehicles (Team, 2014).
Accordingly, companies like Lexus are introducing models like
the NX at a lower price than traditional luxury SUVs or CUVs
in hopes of capturing a wider consumer base (Lieberman, 2015).
Other brands like BMW, Mercedes, and Audi are also competing
in the luxury compact crossover market as equal contenders,
demonstrating a consumer demand for this type of vehicle.
Accordingly, “U.S. sales of SUVs and crossovers expanded
more rapidly than the overall market (+14%)” (Cain, 2015,
n.p.). Taken as a whole, the luxury compact crossover market is
a dynamic one in which the Lexus NX is poised to command a
heavy market share.
4a.
The Lexus NX is perfectly positioned at the end of several
concurrent market trends. First, there is the aforementioned
trend within U.S. car ownership to prefer a compact crossover
as an alternative to a car, truck, or SUV. Furthermore, the
Lexus NX is well positioned at the intersection of two dominant
segments of consumers, which are young adults and the
wealthy. The young adults who make up the targeted market of
the Lexus NX want it all in a vehicle—utility, efficiency, and
luxury. Accordingly, Lexus designed its NX with space and
power alongside fuel efficiency and high-quality design in order
to fulfill these consumer interests.
Fuel efficiency is an important trend impacting automobiles,
with a particular emphasis on hybrid vehicles. Consumers want
more fuel-efficient vehicles for a variety of reasons including
environmental consciousness and immediate economic savings
(Nordan, 2013). In general, most consumers consider fuel

efficiency when buying a vehicle (Team, 2014). Hybrids are
some of the most fuel-efficient vehicles available, and hybrid
vehicle sales went up 61 percent in the U.S. (Nordan, 2013). In
fact, as of 2013, hybrid vehicle sales had risen from just around
50,000 units in 2002 to nearly 450,000 units in 2012 (Nordan,
2013). The NX hybrid model is therefore an important element
of its overall product due to the need to compete within the
increasingly mainstream hybrid. In general, the fact that the
NX offers industry-standard fuel economy in its non-hybrid
models shows that it can at least be no worse the competition in
terms of fuel efficiency, an increasingly important market trend.
Safety is another market trend that matters considerably to the
market demographic to which the Lexus NX markets. The
Lexus NX offers a Pre-Collision System or PCS that “is
engineered to detect an imminent frontal collision and, while
retracting the front seatbelts, automatically prepares Brake
Assist to help provide increased braking pressure the moment
you step on the brake pedal,” helps you maintain a preset
following distance from the vehicle ahead using the Dynamic
Radar Cruise Control feature that “uses radar technology to
sense the speed of any vehicles in front of you,” and then
adjusts accordingly (Lexus, 2015, n.p.). It's competitors offer
similar features, making it important for Lexus to improve and
differentiate its own as a means of staying ahead within this
market.
Overall, the Lexus NX is well designed to meet the challenges
that are faced within its product category. In fact, its design
and features tend to represent a great balance between all the
elements desired by consumers who purchase luxury compact
crossovers. Therefore, its sales should be buoyed by its keen
ability to respond to these aforementioned market trends.
4b.
The CUV market continues to grow and shows no sign of
stopping, as more American consumer segments are finding that
crossovers are the ideal synthesis of their wants and desires
(Madrigal, 2014). Therefore, opportunities abound in addition

to the obvious opportunity of the growing trend of CUV
ownership among American consumers. A primary opportunity
is the desire for fuel efficiency among consumers. If Lexus is
able to increase the fuel efficiency of its NX, it could put itself
ahead of the competition in terms of delivering the most fuel-
efficient luxury compact crossover on the market. Another
opportunity is the growth within the luxury vehicle market. The
luxury vehicle market is growing in the U.S. and has been since
the recession in the late 2000s—but more importantly, luxury
crossovers are a dominant growth sector within this trend
(Team, 2014). Therefore, as a luxury vehicle, the NX is well
positioned to capitalize on the growing trend for a preference of
luxury among U.S. CUV buyers.
4c.
The overall threat to the CUV is its price range and the risks
associated with its target demographic. The Lexus NX costs
around $34,000 USD, which places it well above the yearly
income of over half Americans (Lieberman, 2015). It is
therefore a niche-market vehicle which does not seek mass
appeal but rather mass appeal within a certain market. This
market is volatile due to the volatility within the U.S. economy
for middle class jobs. While the U.S. economy is on a growth
trajectory overall and has been since the recession ended in the
early 2010s, there continues to be greater pressure experienced
within the middle class, which is the market targeted by the NX
(Lieberman, 2015). Should these pressures reach the point of
decreased discretionary money, the specific demographic that
the NX targets—low- to -mid-income luxury crossover
consumers—could cease to exist, taking away the NX's
consumer base.
5.
The contemporary U.S. automobile industry is increasingly
about crossover vehicles. In 2000, crossovers sold just around
1 million units, coming in third to cars, SUVs, and minivans
(Madrigal, 2014). By 2013, they came in second at more than 4
million, behind cars at around 7 million (Madrigal, 2014). Yet

the market its already saturated, with the dominant
manufacturers each having a healthy mix of market share for
both CUVs in general as well as luxury CUVs (Madrigal, 2014).
Furthermore, Lexus's intimate organizational relationship with
Toyota equals an excellent positioning in terms of the
bargaining power of suppliers to control costs in terms of
production (Lieberman, 2014). While buyers demonstrate
significant buying power, the Lexus NX has done an excellent
job of identifying and modeling itself around the buying
preferences of its target demographic (Lieberman, 2015).
Finally, the most significant threat is that of substitutes. As
Lexus predicts more than half of the NX buyers will be new to
the brand, it is clear that brand loyalty is second to product in
the luxury CUV market (Lieberman, 2015). Accordingly,
consumers care more about whichever product gives meets their
needs best in terms of vehicle purchasing, which is what
explains the boom in CUV sales in the first place (Madrigal,
2014).
As part of Porter’s five forces, Lexus has actually entered the
market with a competitive advantage over its competitors.
Lexus is now the new threat of entry, they have had time to
research and consequently develop a product answering most of
the consumers problems within the CUV market. The
competition rivalry is very close to one another causing threat
of substitution for not just Lexus but to any other brand in the
CUV market. The Lexus NX has made many strides with
innovative technology to compete in this market. The Lexus NX
also has the strong brand loyalty of both Lexus and Toyota
backing it up, and this in turn causing it to have a strong
supplier power. Overall the Lexus NX as well as Lexus itself is
well positioned within its industry as Porter's five forces reveal
that it is in an advantageous position regarding most of its
challenges.
6.
The direct rivals of the Lexus NX are Acura RDX, BMW X3,
Mercedes GLK, and Audi Q5. All of these cars are CUV’s. The

people that are interested in buying a crossover include
someone with an expanding family, someone already with
expanded family, and as a higher end comfortable vehicle.
Starting with the Acura RDX the motto being “Refuge for your
next inspiration.” The Acura RDX starts at $35,095. The fully
loaded all wheel drive version starting at $40,195. Adding other
features is extra with all brands, but this is starting price point.
The Acura RDX looks very sleekly and sporty. The Acura RDX
has 3.5L 273 horsepower V6 engine. The Acura averages 20 city
and 28 highway. Next taking a look at the BMW X3 the most
basic model starting at $38,500, and the high-end model is
priced at $45,500. The X3 is a rear wheel drive, 240
horsepower, 27 MPG city and 34 MPG highway, 2.0 turbo, 4-
cylinder. The next competitor is Mercedes GLK, which starts at
$37,900 for base model, and $39,400 for higher end non-
gasoline model. The base model gasoline model has 302
horsepower, with a 3.5L engine, with a towing capacity of
3,500. It averages 24 city and 33 highway MPG. The next model
to compare is the Audi Q5 the starting price of $39,300 and the
high-end model starting at $52,900. The Q5 averages 24 city
and 31 MPG highway.
Last but not the least, the Lexus NX. The low-end model
starting at $34,480, and the high-end model $39,720. The base
model has 2.0L 235 horsepower engine on the front wheel drive
version. It averages 22-MPG city and 28 highway. The strengths
on the company level for Lexus are the price point, and the
reliability of Toyota backing the car. It also has a five star crash
test safety rating. The consumer reviews have been good.
Owners of the Lexus NX seem to like the young sporty,
aggressive, and sleek body. The HMI allows driver to feel as
one with the vehicle. The Lexus NX has a very well refined
interior, which is very sleek and modern. The NX has been well
received in performance the turbo kicks in at the right times to
make the driver feel the power of the NX. While at the same
time the driver has power they also have a very well superior
sports suspension, which makes the car feel much smaller than

it is. The weakness of the company at the competition level is
it does not have the strongest engine, or the refined dash of a
BWM or a Mercedes, the most technology again such as BMW
or Mercedes.
Key Industry
Success Factors*
Your company
(e.g. Lexus)
Competitor
#1 rating
(e.g. BMW)
Competitor
#2 rating
(e.g. Mercedes)
Competitor
#3 rating
(e.g. Audi )
1 – Brand Recognition
2
5
5
3
2 – Extensive Distribution
5
5
5
4
3 - Economies of Scale
3
4
4
4
4 - Product Innovation
2
5

5
3
Total
12
19
19
14
Table Conclusion: Due to Lexus being new to the
crossover market, it is a little behind the other companies such
as Mercedes, Acura, BMW, and Audi. The rest of the CUV’s
already have an established market and already have a loyal fan
base. Consumers tend to be loyal to one brand so it is much
harder to entice a consumer to switch from one brand to
another. The strength are for the new customers looking for a
luxury crossover may come to Lexus due to the lower price and
the reliability of a Toyota. Another reason a consumer may
come to Lexus it is well-refined very aggressive body style and
innovation such as HMI. Additionally Lexus is of lower cost for
much more luxuries and benefits, essentially more for less. In
contrast, consumers will lean to the more established brands
just because they have already worked out the issues with the
cars and now are working on working towards a more refined
crossover, with good MPG and power.
7.
SWOT Analysis
Strengths: Cheapest, on par with MPG, Sleek, Sporty, Handles
well, for younger crowd, turbo, reliable, amazing technologies,
HMI interface touchscreen, working on an electric version, and
premium attributes, lots of safety features and general good
reviews.
Weakness: No brand loyalty as it’s just coming into market, no
recognition most people do not know about the car, not biggest
crossover, could be more fuel efficient
Opportunities: Growing crossover

market, improving fuel efficiency, luxury vehicle demands
growing, celebrity endorsement, loyalty program, and other
incentives such a Toyota care expanded to Lexus.
Threats: Everyone has common safety futures, luxury crossovers
are very expensive, not mass appeal, people are not willing as to
spend as easily as before recession, commercials are not as
common, not most horsepower, does not have high class feel
such as BMW and Mercedes, and not most fuel efficient.
8.
Lexus will use demographic segmentation to sell the Lexus NX
among young professionals who are either single or have a
small family. Age and income can also be a large factor when
using demographic segmentation. Lexus can also target
specifically men or women of a certain age. Lexus as well has
entered this market as a late bloomer which in turn had gave
Lexus time to research all the weaknesses of their competitors
and created the answer to any previous segmentation. The Lexus
NX could target the tech savvy individual with its HMI features.
Of course this young professional, either it be a family man or a
trendy young lady or a tech fanatic will have to have the income
to purchase this new crossover.
Lexus is relatively an expensive brand, but in the crossover
market, the Lexus NX is the least expensive offering more for
less. This will also open the door for psychographic
segmentation, where young professional who have an image to
acquire or maintain, can now purchase a luxurious crossover
part of the Lexus reliable brand with a lower price tag compared
to its competitors. Consumers who drive Lexus products
consider themselves as status conscious socialites. They
consider Lexus an upper class brand, which competes with
brands such as Mercedes, Audi, BMW, and Acura. Thus, Lexus
will use psychographic segmentation to attract these individuals
towards the Lexus NX. These individuals are those with finer
taste in vehicles where a brand such as Toyota, Honda, and
Nissan will not suffice their luxurious thirst. Consequently,

Lexus will select their target market through demographic and
psychographic segmentation.
8a.
Consumers who are interested in Lexus NX want to get the same
benefits or more as they would get from competitors. However,
they would like to pay either the same or less. This is why
Lexus has targeted their price less than their competitors in the
crossover market. Furthermore, Lexus is offering more advance
features and qualities than their competitors.
8b.
Lexus criteria are identifiable and reachable. Their segments
consist of only young high earning professionals, thus making
them easy to identify. If their segments were to consist of older
consumers, young consumers, middle aged consumers, and
consumers from all income brackets; this would cause great
difficulty for Lexus to market to each segment and to identify
where to market for each target. Usually, younger consumers
with higher income are more informed through social media and
other sources. This will in turn ease Lexus’ access to this
younger consumer base. Consumers who have higher income
tend to have easier access to financing and leasing of a car. As a
result, it will be more profitable for Lexus to deal with them.
8c.
Lexus will use differentiated targeting because they want to
target the NX’s different models to different people within their
segments.
Lexus will target the NX 300h hybrid model to those young
consumers in their segment who are environment friendly and
care more about gas mileage versus performance.
Lexus will target the standard NX 200t model to those
individual in their segments that are more concerned with price
than gas mileage and performance.
Lexus will target NX 200t F sport edition model to those
individuals in their segments that give their top priority to
speed and a sportier look as well as feel to the crossover. Thus,
differentiated approach will help Lexus in targeting throughout

the segments.
9. Positioning
The Lexus brand overall is a more reliable brand than its
competitors. According to US news, Lexus has more products
with 5 star reliability rating than any of its competitors. Thus,
this brand reliability will help consumers consider Lexus, when
purchasing in the crossover market. Lexus NX also has human
machine interface features while none of its competitors have
this new feature. Accordingly, buyers will prefer NX to its
competitors because of this exclusive feature.
Lexus NX came into the market after its competitors, after
extensive research and innovation. The Lexus NX is one of a
kind with all kinks ironed out. Thus, the NX will not have
issues with recalls and other issues found in its competitors.
Lexus also add some extra features in order to make it unique.
Consequently, NX is on its ideal point since it has less defects
and issues than its competitors but with more qualities. And as
stated before, since Lexus entered the crossover market at a
later time, Lexus has had time to examine the market and really
zone in to what consumers are looking for in a crossover. Lexus
will position the NX as more reliable than its competitors with
HMI feature that makes it unique and better than its
competitors.
9a.
For young hip urbanites who seek a luxury crossover of the
highest quality, the Lexus NX offers the finest technology as
well as the ultimate reliability in the crossover market which
ensures a superior luxury crossover driving experience.
10.
Lexus as a whole has positioned itself as an innovative,
luxurious, and sustainable global brand, one whom is here to
stay for many years to come. The new Lexus NX, a luxury
compact crossover, added to this marketing strategy by
delivering an exciting new Lexus product to the crossover
market. Lexus has taken the next step in increasing their

product depth, hopefully increasing market share and taking
advantage of the booming crossover market.
Lexus NX as a new product has the support of the Lexus strong
brand name known for its reliable and innovative car products.
For starters Lexus was the first to introduce the first luxury
hybrid and the first eight-speed automatic transmission. Lexus
was the first innovators to launch the first dynamic walker
recognition software as well as LED low-beam headlights. In a
recent interview with Jeff Bracken (Lexus pressroom), the
Lexus group vice president stated that the Lexus NX would
offer new buyers an “exciting entry point into the Lexus
crossover and luxury utility vehicle family. Its expressive
design and turbocharged performance embody the technology
and design focused direction customers can expect from Lexus”
(p.1). Lexus is ready to make their mark in the crossover
market.
The Lexus NX, in terms of product strategy positioned itself as
the perfect crossover for young hip starter families as well as
young urban image-conscious professionals looking to make a
statement. After years of failing to benefit from the younger
market, Lexus decided to change their marketing strategy for
the future and focus their attention to the younger generations
by adding product scope positioning, hence the Lexus NX.
Lexus decided to first launch the Lexus NX in China, the fastest
growing trend setting market of the world, here Lexus
confirmed their research about young consumers. These young
consumers centered their wants to brand reliability, self-image
and design.
The Lexus NX offers luxury at a reasonable price as well as
innovative turbocharging allowing for a smaller engine with
more power and a more curvilinear design. The Lexus NX is no
exceptions to the Lexus standard of elite build quality; NX
offers leather stitching body-conforming seats, stand-up screen
interface with a touch pad, and Pre-Collision System all
standard. One of the main selling points of the Lexus NX is its
exciting new feature of Human Machine Interface, or HMI, this

new technology focuses on making the driver and the car one.
There is less need for the driver to take their eyes off the road.
This is increasingly important for young drivers who have a
constant need for social presence.
The design of the NX also was meant to be a head turner, with
its sleek lines and aggressive sporty design there is no missing
it. The NX offers three trims the 200T, 200T F Sport and 300h
hybrid for the sustainable green consumers. The EPA gives the
Lexus NX a rating of 35/31mpg city/highway, which makes it a
leader in its class for fuel economy.
Similarly Lexus choose penetration-pricing strategy for the
Lexus NX, coming in the market with a relative low price
compared to established direct competitors such as Acura RDX-
$35,095, Audi Q5-$39,300, BMW X3-$38,500, and Mercedes
Benz GLK-$37,900, the NX starts at MSRP-$34,480. With
competitor’s entry pricing ranging from $35,000 to $39,000, the
NX offers luxury at a lower price but not too low. The NX also
offers leasing options with monthly low payments starting at
$369. Even though the Lexus NX is coming in the market at a
lower price, many of its competitors have different product
depth in the sedan market at a lower price to entice young
drivers.
Lexus does not believe in lowering their pricing standard on
any of their vehicle types, the Lexus NX is no exception. Lexus
has added extra features such as the HMI to compensate for
their competitors strategy to entice young drivers. Lexus also
has a great reliability rating, making it a strong contender, why
go to a brand such as Audi where it is incredibly expensive to
maintain the vehicle when you can have a long lasting Lexus.
Lexus also believes in laying a foundation for the future, a
long-term sustainable growth plan. A plan where they won’t
need to lower their price on entry-level luxury vehicles to
$30,000 or less by creating vehicles inspired around innovation,
design, driver advancement, and the expansion of their product
portfolio (such as the Lexus NX). According to Bracken, “We
don’t see a need to go there [lowering the price line]…we would

rather invest our research and development into more traditional
luxury segments” (p.1). Lexus as a company has a plan for the
future and will not compromise luxury to huge growth done
today but gone tomorrow; they believe in long-term growth. I
believe this strategy is great because this touches on consumer
psychological needs, consumers want I premium product and
having a lower price dilutes the brand.
In terms of distribution, the NX will be a part of selective
distribution. The NX will only be sold in Lexus dealerships. I
believe this distribution will add to the products buying
experience, allowing for customers to receive special attention
when in the dealerships. This strategy will also allow consumers
to truly experience the ultimate driving experience with Lexus’
HMI feature. According to Bracken, only 40,000 NX units have
been allocated for the US in 2015 (Amend). This is a great
marketing strategy, this product is new and exciting, and
making it limited in the first year will attract the attention of
consumers. This will be a smart strategy especially when
targeting young consumers, who are always looking for the next
big thing. Lexus also offers customizing the NX online and once
ready delivering your unique NX to the dealership, again
attracting the attention of young consumers who are online
shoppers. This will allow the chance to young consumers to feel
exclusive; the idea that their NX once customized will be their
very own limited NX.
Equally as important is Lexus’ promotional strategy; they must
be able to communicate to young consumers their new product.
Advertising will be the main promotional strategy. One way
Lexus has decided to promote the NX is by teaming up with
artist Will.I.Am in creating TV commercials to attract the
younger generation. In one specific commercial, the setting is in
a futuristic world where the entire set shares the NX's sharp-
angled design aesthetic, showing consumers the NX is of the
future from its design to its HMI technology. Commercial such
as these are created to entice a younger generation of upscale
car buyers with sportier designs and sexier advertising. Lexus is

also using a print, digital and ooh campaign, with their print
appearing in fashion forward magazines such as GQ and Vogue.
Their slogan “Beyond Utility. Beyond Boundaries” embodies
the strategy focused on young consumers. New design brought
by Lexus creates a new form of beauty and reliable utility used
in everyday necessities that creates an overall greater human
satisfaction. Lexus is making their positioning very clear for the
Lexus NX, they want young high class urbanities, in a recent
interview with Brian Smith, Lexus vice president of marketing,
he stated “This marketing campaign creatively demonstrates
that this vehicle–which offers a chiseled, angular body design
with an aggressive turbo-charged engine–is fun to drive and
ready for any adventure” (Agency Spy).
Lexus is taking the correct steps in acquiring the younger
generations attention from working with great artist such as
Will.I.Am, as well as appearing in networks such as CBS, ESPN
and NBC. They will also market online in such places such as
YouTube, Facebook, Google and Twitter. By using this kind of
advertising they are targeting the psychological needs of young
professional, who are image conscious and always looking for
the next big thing whether that be a cool new gadget or a cool
new car.
11.
Measuring the success of the promotional package set forth for
the Lexus NX will require measuring the success of Lexus
advertising. Navigational metric would be the best option for
Lexus. As stated before Lexus is running commercials on
networks such as CBS, ESPN and NBC. This exposure will
allow Lexus to reach a greater audience especially through the
use of social media. According to the Pew Research Center, As
of January 2014, 74% of online adults use social networking
sites (Pew, para 1). This will allow Lexus to reach a wide range
of young professionals. The frequency a targeted consumer
should be reached should be 3 times, either through
commercials, social media, or by the Lexus NX print campaign.
The next step is to see what the young professional consumers

think of the advertising campaign, The Burke Test; this
classical test will be perfect because Lexus can get an
immediate reaction from young consumers. After airing the
Lexus NX commercials either through networks or online social
media, young women and men will be acquired from many cities
to see how well they intake the newest Lexus model. This test
will allow Lexus to see if the Beyond Utility slogan is making
young consumers understand what Lexus NX stands for, and
does the ads persuade them to join the Lexus family. Lexus can
also get a sense if their new product depth is attracting this
younger generation, versus before their main customers were
older individuals, does it grasp young consumers attention
enough to bring them over to Lexus.
After the test, Lexus must see what behavioral changes did the
young consumers made. For instance, those that purchased the
NX, Lexus can survey them and ask what made them buy the
NX, was it the advertising. The best way to measure the success
of the promotional campaign is by Tracking forward, this
evaluative tool can help record the results from the ads. This
tracking system can be implemented in all forms of advertising
used by Lexus. For example, the network advertising can have a
toll-free number assigned directly to the campaign, consumers
calling the number to learn more about the NX, or to get
information of how to reach a selective dealership or to learn of
any new offers can be used to track effectiveness of the ad. The
print campaign may also have response cards where the
consumer can send inquire of the vehicles; Lexus can track that
way as well. And last but not least, the online social media
marketing is the easiest to track; information of who is looking
at the NX can be analyzed with the tracking software. Once this
marketing metrics is implemented Lexus can measure the
success of their campaign and eliminate or enhance a program
that is working in their favor. In the end Lexus wants to have a
fruitful product and this marketing metric can help Lexus
measure if their long-term plan is going according to plan.
12.

There are a few steps Lexus’ competitors can take in response
to Lexus’ proposed marketing mix. First, they can bring their
prices closer to Lexus’ price in order to reduce the price
margin. Thus, the consumer considering purchasing the NX
because of its relatively low price might consider buying a
competitors brand because they will get same for same. Second,
they can provide extra warranty and service packages up to a
certain millage to attract those consumers who prefer Lexus’
reliability to a competitor’s brand. Third, they can provide
better lease options in those distribution centers which are
located in downtown and urban areas, since these areas have
higher percentage of young professionals. Fourth, they can
increase their marketing efforts on social media, thus reaching a
greater target audience than Lexus. Finally, they can come up
with new small luxury sedan which will have all the same
feature like NX but with a lower price.
Lexus will continue providing a superb customer service
experience, one which is known for in the automotive industry.
As well as fulfill customer needs and expectations by providing
vehicles equipped with the latest technology, the most reliable
and with the edgiest design. Consequently, consumers will
prefer Lexus’ products to the competitors.
perceptual map
reliability nx glk rdx x3 q5 0.0 5.0 4.0 3.0 4.0
1.0 0.0 5.0 3.0 3.0 4.0 2.0 nx glk rdx x3 q5
1.0 1.0 1.0 1.0 1.0 1.0

18
MKTG 301
Group Project
Overview
You will work with the group to develop an abridged version of
a marketing plan for the chosen company and product. The
written project is worth 40 % of the total grade.
DUE DATES AND OTHER REQUIREMENTS:
· The penultimate draft is due in class on Wednesday, April 15
· Please ensure that the group only sends me one version of the
e-copy on the due day.
· The e-copy should always be in Microsoft word format, NOT
PDF format.
· The final project is due in class on Wednesday, April 29.
· Please make sure that the e-copy and the hard copy are the
same document.
· Please send an e-copy of your project to my email
[email protected] on the due day.
· Please bring a hard copy of your final project to class on the
due day.
· Please also bring your completed team evaluation form on the
last day of class.
You will be part of a group of students (number to be
determined by class size). You will form your group during the
first class, and exchange the names and contact information
with each other. This project allows individual members to
assume responsibility for portions and contribute equally to the

project. It is the group responsibility to ensure that the final
product integrates all components and present as one single
professional product. A team evaluation will be taken into
consideration when assigning project marks at the end of the
semester. You must meet regularly in person as a group,do not
rely on conducting group project meeting in the cyberspace
alone.
Your group should select a product and a company of interest.
For purposes of this project, I would recommend that you
choose a company that is a publicly held company so you will
have access to information. Your reports must be grounded in
reality, and you’ll need to be able to determine how the product
fits into the firm’s strategies and approaches.
GROUP PROJECT
The Report will include:
· A cover page, a table of contents and an executive summary:
An executive summary previews the aim, the main points and
key findings of your report, and should be single spaced and not
be more than one page.
· A description of the product itself from marketing, not
necessarily a technical, perspective.
· Describe the product and its primary benefits to the
consumers.
· Describe the brand perception and any relevant brand related
issues/challenges?
· Why would consumers choose this product over those of the
competitors’?
· A description of the firm and its strategy. You need to
examine and should be able to derive:
· The strengths and weaknesses of the company as well as the
products under investigation.
· The overall strategy and sustainable competitive advantage of

the company as to illustrate what makes this company
successful overtime.
· A description and analysis of the market trends.
· What are the major current and emerging market trends
impacting on this type of products?
· Derive the opportunities and threats to this type of products.
The key opportunities and threats will be integrated into the
SWOT table later.
· A description and analysis of the industry dynamics.
· What are the industry dynamics?
· Use the Porter’s Five Forces to help determine whether or not
the impacts of these forces are favorable or unfavorable to the
bargaining power and profitability of the company under
investigation
· Derive any relevant opportunities to be integrated into the
SWOT table later.
· A description and analysis of the competition
· Who are the direct competitors?
· What are the strengths and weaknesses of the competitors at
the company level?
· Construct a capability profile of the competitors and draw
implications based on this profile.
· Derive any relevant opportunities and threats to be integrated
into the SWOT table later.
· A concise SWOT table and analysis.
· This is a summary table of the strengths, weaknesses,
opportunities and threats derived from the previous sections of
products, company, market trends, industry dynamics and
competitor analyses. Do not construct a summary SWOT table
without ensuring that the key points you put into this table are
fully integrated with these previous sections.

· Analyze and discuss the interactions among the SWOT as to
leverage the strengths to capture emerging opportunities, turn
weaknesses into strengths, use strengths to fend off threats, and
etc.
· What conclusions can you draw from the analysis of the
SWOT table?
· Segmentation and Targeting.
· Discuss what segmentation approaches would be used to
derive potential segments
· Once the potential segments are derived, discuss what criteria
for evaluating the segment attractiveness have been used to
select the final/chosen segment(s). Clearly substantiate the
criteria that you have chosen and use available statistics on
market size, market growth and etc.
· How will you target the chosen segment(s) and what targeting
strategy will be used and why?
· What is the positioning for your product?
· Develop a perceptual map using the key determinant attributes
that are important to your customers for making purchasing
decisions
· Discuss the perceptual map and determine whether or not the
product is currently at the ideal point
· If the product is at the ideal point, what would be your
positioning strategy and why?
· If the product is not at the ideal point, what would be your
repositioning strategy and why?
· Either way, come up with a positioning statement. The
positioning statement should include the target audience, the

category in which the brand competes, the point of difference or
differentiation, and the convincing proof that the brand delivers
what it promises.
· Marketing Mix. Based on the overall positioning strategy and
positioning statement describe the elements and implementation
of the marketing mix, explain how the marketing mix reinforces
the positioning?
· In terms of product strategy, describe how the product and its
features support the overall positioning?
· In terms of pricing strategy, describe the price differentials to
those of the key competitors. Explain the unique value
proposition in terms of value versus price. Use real prices to
substantiate your discussion.
· In terms of distribution strategy, explain what distribution
strategy you would use and why? What tradition channel as
well as online distribution would you use and why? Give real
life examples.
· In terms of promotion, what would be the purpose of your
overall promotional campaign and why? What would be the
central message? Any slogans or tag lines? What would be the
promotional schedule and other related promotional tactics to
support your overall promotional campaign?
· Marketing Metrics
· Based on your proposed marketing mix, what marketing
metrics will you use to measure the success of the
implementation of the proposed marketing mix? And why?
· Do not discuss what happened in the past. Your metrics are
based on what you anticipate might happen in the immediate
future once you have implemented your proposed marketing
mix.

· Competitor Reactions
· What do you expect will be the competitive reactions in
response to your proposed marketing mix?
· How will you handle their reactions?
INDIVIDUAL SCORE
There is a project grading rubric posted on the blackboard to
serve as an example for a marking guide.
Your individual score will be calculated based on the grading
rubric.
Your individual score = the average % of the score(s) achieved
in your section(s) x the group score; or, the average % of the
score(s) achieved in your section(s) x % of the overall team
evaluation score assigned for you by your group members’ team
evaluation at the end of the semester, whichever is less.
If you have actively contributed to your group project and your
group members have substantiated your contributions in the
team evaluation, the maximum score will be the score achieved
by the group project.
If you do not support your group efforts, your individual score
will be based on the % you have achieved in your sections x the
group score; or based on % provided by the group members on
the team evaluation, whichever is less.
So, it pays to participate in and contribute actively to your
group project throughout the semester.

The body of the final written report will be maximum 18 pages,
1.5 space, Times Roman font 12 or equivalent, excluding cover
page, table of contents, executive summary, appendices and
references. References should be in APA format and
appropriately referenced in the body. Plagiarism is not
tolerated and subject to discipline.
All written reports should be professionally presented, neatly
typed, and free of errors in grammar and spelling. Reports
should have a title page showing a title for the report, course
name and number, date due and the students’ names. All work is
due at the beginning of the class on the due date. Any work
turned in after its due date is subject to approval.
Please provide references at the end of the report, plus
appendices if so desired. Also, please add a page listing the
specific contributions of each individual member according to
the sections listed on the project rubric. Please see table below.
Name of one member only
Executive Summary and Introduction
Product description, Key users and brand factors
Company description, competitive advantage and strategy
Market Trends

Competitor analysis
Industry dynamics
SWOT table, analysis and interpretation
Segments selection, evaluation and targeting
Positioning including perceptual map and positioning statement
Marketing mix
Marketing Metrics
Competitors’ reactions
There should only be one member’s name per section. In
principle, if you have been the leading person who has
significantly contributed to that specific section, way more than
any other members in the group, then your name should be on
that section. If you have significantly contributed to more than
one section, then your name should be on all corresponding
sections. In any case, there can only be one member’s name per
each section.
It is important that you do at least an average weight of the
project. Please check with the project rubric posted on the
blackboard for further guidance and example of how your
individual score will be calculated.
YOU CAN CHOOSE ONE CONSUMER PRODUCT IN ANY OF
THE FOLLOWING CATEGORIES (For ideas, look at
http://www.toptenreviews.com, http://reviews.cnet.com,
http://www.caranddriver.com, and etc.):
· Consumer electronics, including smart phones, introduced in
second half of 2014 and 2015
· Cars introduced in the second half of 2014 for 2015

· Entertainment, hotels, travel products
· Household goods and home appliances
· Baby, Oral, Personal and Home care products
· Sporting goods or shoes
Your group will prepare a one page typewritten project proposal
containing your top 3 choices of product and firm (in order of
preference), names of your group members and contact
information.
There is a blank project proposal on the last page of this
handout, and you can also download it from the blackboard to
prepare your group proposal.
My email is [email protected]. Please name your attachment in
the following format: “MKTG 301 Spring 2015 Project
Proposal Your last name”. Your last name should be the
person’s last name who submits the proposal on behalf of the
group. For example, “MKTG 301 Spring 2015 Samsung Galaxy
F Smith”.
Your last name should be the person’s last name who submits
the proposal on behalf of the group. Please also make sure that
the names of all the students who have contributed to your
group project or assignment/presentation are listed on the cover
page of your project, and the cover slide of your group
presentation.
Group Proposal for MKTG 301
Group Member (full name)
Phone Number
Email
1
2

3
4
5
6
7
Preference for group project (in descending order):
Company
Product
Rationale
1
2

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