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Monday, March 21, 2005

Toyota is starting a non-profit record label... as marketing

    Posted by Adam Crouch

Source: Mini Truckin'In 2003, Toyota started a new brand called "Scion", aimed at American 20-somethings. In order to succeed in this market, they've done a lot of interesting things to build their "cool", such as putting on a great urban/graffiti art tour, hosting big popular nightclub parties monthly in 6 metros, a tour of "cult music films" on college campuses, and distributing a magazine that includes funky pictures of customized Scions.

In Toyota's latest move, they've decided to start a record label. The sole purpose of it is to give exposure to up-and-coming musicians, building Scion's "street cred". What's really interesting is that Toyota views this as purely a marketing play: they have no intent to make money off of the venture.

Scion does not take any profit from the releases, and it allows the artists to own their own master recordings, said Jeri Yoshizu, Scion's manager of sales promotions. The goal, she said, is simply brand extension by association with underground music.

"If we did make money, it would not have such a positive effect," she said. "We don't want to cross that line."

I really like Toyota's approach with Scion's marketing. It's easy for car companies to just use their tried-and-true typical marketing strategies, but Scion's has been very unique. Rather than blanketing the country with lots TV & magazine ads, it's focused on smaller, very targetted campaigns. If you want a brand to be "cool" and have "street cred", grassroots is certainly much more effective than mass media. It's important to note that they view 20-somethings as pretty jaded about marketing, and so they've purposefully tried to position themselves as simply facilitating these "hip" events, and gone to great lengths to make sure they don't come off as phoney.

And it's been very successful, selling almost 100,000 cars in 2004. I'll bet their marketing spend was also a fraction of the typical auto new product launch.

Many people don't like the styling of Scion's current range (primarily the xB), and that has probably depressed Scion's success quite a bit. It's amazing though that their marketing campaign has been so effective that they've still had great sales despite that. A good marketing campaign is generally worthless if people don't like the product, after all.

It's tough to tell how big that "turned off" group is, and how its size has changed over time. I know I initially hated the xB's design, but it's really grown on me.

As time goes on, I'm sure they'll add more variety to the product line, and there won't be as big of an emphasis on the xB. Toyota has a stellar track record in designing popular cars, so I have no doubt that their product will improve. If they keep up the innovative marketing, they'll have a winner on their hands.

Another thing I like about Scion: how they've balanced offering options and keeping manufacturing simple.

They've kept manufacturing costs down by giving the standard model lots of features, and then offering very few factory options: just tranmission and color. But rather than churning out cookie-cutter cars, they offer lots and lots of cosmetic/sound customizations. These are dealer-installed, however, simplifying the manufacturing process. The customer ends up with more choice: she can walk into the dealership, pick a Scion off the lot, and then pick the customizations she wants, rather than only choosing from the features of the cars on the lot. It's these customizations that really make a car feel uniquely personal.

Related posts on The Raw Prawn
- McDonald's uses graffiti to woo the US Latino market

Further Reading
- Detroit Auto Show: Scion's Promotion Manager's presentation on their "underground" marketing
- Forbes: Scion's Smart Moves
- BusinessWeek: What does Gen Y want in a car?

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