Toyota Scion New Beachhead Market

Market Dynamics
Toyota Scion had initially targeted the youth. This market is mainly composed of people who were born from the 1990s. Usually, these individuals’ desire unique and tech-savvy products. Unfortunately, Toyota was unable to appropriately target this market using the Scion brand, which eventually led to its discontinuation. Except for the initial unique design, the car model did not have any significant differences from the other small cars in the market (Buss). Since most modern vehicles have unique features and designs, design and small size alone were not enough incentives to attract customers. Additionally, the lack of a fuel-efficient engine, such as a hybrid engine, made most potential buyers shun away from the Scion due to the skyrocketing fuel prices.
To overcome the challenges that the Scion brand had initially faced, I would re-brand the vehicle into a tech-savvy premium small car. I would then target tech-savvy individuals. Most tech-savvy individuals are highly educated and possess at least a college degree. Due to their educational background and knowledge of the detrimental effects of pollution in the environment, most of them have an interest in using fuel-efficient vehicles. In addition, their experience in engineering and technological devices makes them interested in having cars that are equipped with the latest technology. For example, most of them love cars that have anti-collision and anti-roll systems. They also like cars that have a modern infotainment system. Currently, individuals working in technological-related industries are among the most paid in the country. Accordingly, most of them prefer to enjoy facilities and equipment that match their income status. As such, they also lover cars that have premium and luxurious interior. Although they are composed of both men and women, the former are the majority. Regarding geographical locations, most of these people live in urban centers since they are near their places of work. In these areas, roads are tarmacked, and hence sports cars and small vehicles can easily navigate. Further, these places experience heavy traffic during rush hours, and it is therefore common for people to use alternative transports such as the train or bicycles to commute. Others also opt for shared cars, such as Uber, to avoid the hustles of looking for a parking lot. Given the characteristics of the tech-savvy individuals, a luxurious, fuel-efficient, and technologically advanced vehicle can be accepted by persons in this market, which they can occasionally use when going to work.
Under the new brand, the car would have the potential of rivaling the luxury Lexus brand and also the Audi A3 and Acura ILX (Halvorson). Most individuals in the technology industry, prefer premium cars that have sophisticated technologies. Additionally, they are concerned about the fuel efficiency of their vehicles, and would, therefore, like to buy small but technological advanced cars. Another interesting factor for the re-branding is that most individuals in technology-related industries are young (less than 30 years), and also have high incomes. In this regard, they would be more willing to buy the new re-branded vehicle due to its ‘youthful’ shape, and also its technological features. Their high incomes would also make them more willing and able to purchase the car at a high cost, which would make the model highly profitable for Toyota.
Total Addressable Market (TAM), Serviceable Available Market (SAM), Serviceable Obtainable Market (SOM)
In 2016, millennials purchased 29 percent of the vehicles manufactured in the United States, and these figures are projected to increase to 40 percent in the year 2020 (Kurylko). At this rate, the millennials may purchase about 35 percent of the vehicles that will be manufactured in the year 2018. Mintel establishes that 41 percent of millennials are interested in having the latest technologies in their car. Statista also notes that 17.5 million vehicles were sold in the United States in the year 2017. Given the projected increase in the demand for cars in the United States, the demand for new cars in the year 2018 may increase to 18.46 million units (Mintel). The Toyota share of the U.S. car market in the year 2016 was 15.2 percent (Statista). This proportion is expected to only increase to 15.5 percent in the year 2018. As the new flagship car brand for Toyota in fuel efficiency and technological equipment, the re-branded Scion model will control 40 percent of Toyota’s cars in this segment when it fully accepted in the market. Finally, the rebranded Scion model will cost an average of $30,000.
 
Calculations of the Rebranded Scion’s TAM
The demand for cars by millennials in 2018
35%* 18.46million= 6.461 Million
Millennials willing to have the latest technology in their vehicles
41%* 6.461 million= 2.64901 million
Total Addressable Market (TAM)
Assumes Toyota is the only seller
TAM: 2.64901 million *$30,000= $79,470.3 million
 
Calculation of SAM
Toyota share of small fuel efficient and technological advanced cars
15.5% * 2.64901 million= 0.41059655 million
Share ownership of the Scion (40%)
40% * 0.41059655 = 0.16423862 million cars.
The average price of the new Scion will be $ 30,000
Total revenue from Scion brand
$30,000* 0.16423862 million cars= $4,927.1486 million.
 
Calculation of SOM
As a new re-branded product, the Scion will start with market ownership of 15% of the Toyota fuel-efficient and technologically advanced vehicles.
Toyota share of small fuel efficient and technological advanced cars
15.5% * 2.64901 million= 0.41059655 million
Share ownership of the Scion (15%)
15% * 0.41059655 million = 0.061589482 million
Total revenue of Scion
$30,000* 0.061589482 million= $1,847.684475 million
Full Life Cycle Use Case
 

Value Proposition
Position Statement
The Toyota Scion is the ideal vehicle for tech-savvy individuals who desire to own the most technologically advanced and fuel-efficient car that is eco-friendly, reliable, and easy to drive.
Criteria for Future Beachhead Customers
The following two criteria are important when examining my future beachhead customers:

  1. The ability of the target customers to purchase the items I am selling.
  2. Whether the target customers have compelling reasons to buy.

The ability of the target customers to make a purchase is what determines if they have actual demand. If the target customers do not have enough money, the market will not be attractive since it will not provide enough revenues to sustain the business. In this regard, I cannot target to sell the re-branded Scion to low-income earners since they will be unable to purchase the vehicle. Even in the case where the target customers can make a purchase, it is essential to check if there are compelling reasons to make them purchase the company’s products. The evaluation of this criteria is necessary since most businesses fail to attract their target customers in cases when there no compelling reasons to make them purchase its items. For example, it is inappropriate for me to target farmers using the rebranded Scion since most of them may be most likely looking for vehicles that may work in a farm, such as a pickup.
Five Potential Competitors

  1. Subaru Impreza
  2. Kia Forte
  3. Chevrolet Volt
  4. Volkswagen Golf
  5. Mazda 3 (Ogbac, 2016).

 
Works Cited
Buss, Dale. “Toyota can only blame itself for demise of Scion brand.” Forbes, 3 Feb 2016, www.forbes.com/sites/dalebuss/2016/02/03/toyota-can-only-blame-itself-for-demise-of-scion-brand/#72e5795a52e0. Accessed 1 April 2018.
Halvorson, Bengt. “Here are 5 reasons Toyota’s Scion bran failed.” Business Insider, 9 Feb 2016, www.businessinsider.com/here-are-5-reasons-toyotas-scion-brand-failed-2016-2?IR=T. Accessed 1 April 2018.
Kurylko, Diana. “Slow to recover from recession, but fast becoming a major buyer segment.” Automotive News, 27 Feb 2017, www.autonews.com/article/20170227/RETAIL/302279963/the-millennials-are-coming. Accessed 1 April 2018.
Mintel. Millennials drive new cars sales with the US market forecast to reach 18.46 million units sold in 2017. Mintel Press Office, 2018, www.mintel.com/press-centre/retail-press-centre/millennials-drive-new-cars-sales-in-the-us. Accessed 1 April 2018.
Ogbac, Stefan. “Cutting-edge tech wrapped in compact package.” Motor Trend, 6 April 2016, www.motortrend.com/news/10-tech-heavy-compact-cars/. Accessed 1 April 2018.
Statista. “Toyota’s share of the U.S. car market in 2012 and 2016. Statista, 2018, www.statista.com/statistics/250371/market-share-of-toyota/. Accessed 1 April 2018.
Statista. “U.S. Automotive industry-Statistics & facts.” Statista, 2018, www.statista.com/topics/1721/us-automotive-industry/. Accessed 1 April 2018.