As Prepared for:
As Prepared for:
Jim Farley
Vice President, Marketing
Toyota Motor Sales, U.S.A., Inc.
Automotive News Marketing Seminar
June 1, 2005
Century City, CA
________________________________________________
Good afternoon! …
This is my first speech
since becoming head of marketing
for Toyota…
and I’m a bit nervous…
kind of like how I felt recently
when I was interviewed by “60 Minutes”
on the success of Scion.
I’ll never forget telling my Mom
that I was going to be on “60 Minutes”.
Instead of being thrilled,
she said, “Oh Jim…
I thought things were going so well
at Toyota…
did you do something wrong
with Dr. Toyoda’s money?”
The interview went very well…
and was positive…
but sometimes it’s easy
to jump to the wrong conclusions…isn’t it.
In fact, we’re going through a little of that
right now
on incentives.
Several recent news stories have pointed out
that Toyota has been spending
more on incentives this year
than ever before.
And that’s true…
but it’s not the whole story.
We’re spending more on incentives now
because several of our key vehicles
are in their final product cycle
and we need to stay competitive.
While that seems like a lot more
than normal,
you shouldn’t jump to any conclusions.
According to Autodata…
Toyota’s incentive spending is still
one of the lowest of any automaker…
and significantly below spending
by the Big 3.
People are also jumping to conclusions
about the future of
Toyota marketing.
Since I came from Scion,
some think I’m going to
radically change everything
and drop TV.
Not at all.
We have some great things
going on in Toyota marketing
and I plan to stay the course.
But my message to my people…
and to all of you today…
is that our customers ARE changing
and we have to be ready
because we’ve entered
the age of “specialization”.
And that’s what I want
to talk about today…
the changing face of our industry
and our customers
and how we need
to adjust our marketing
to be successful in the future.
(Pause)
Let’s start with the changing face
of our industry.
There’s a new automotive order
emerging in the U.S.
According to a recent study
by the Michigan-based
Center for Automotive Research,
new American automakers like…Toyota…Nissan…and Honda…
represent the fastest growing segment
of our industry
and created ALL of the growth in our business
during the past decade.
In fact…as a group…
these companies are the “fuel injector”
for our economy,
investing nearly $27 billion
in new factories here
and creating more than
55,000 high-paying American jobs
over the past two decades.
In addition,
Southern California is fast becoming
the new hub of our industry.
Greater Los Angeles is now home
to 9 international automakers…
including Toyota…
and 20 auto design studios
for nearly every make.
So, what’s the result of this new order?
Well…for one…
an explosion in new product introductions.
This model year alone,
a record 63 new products
are being launched…
or…an average of more than
one new vehicle every week!
So,
how can you stand out
in the tidal wave of new introductions?
Differentiation is king.
Think about it…
the biggest winners in today’s market
are “personality” vehicles…
cars like the Prius…
the Chrysler 300…
and the Mini.
To be highly successful…
cars…
and their marketing campaigns…
must be bold…distinctive…
and have benefits beyond those
offered by the 240 other nameplates
already in the marketplace.
(Transitional Pause)
Like the industry and vehicles…
our customers are rapidly changing too.
In fact, we are on the cusp
of a new boom in business
that will create
an exciting new Golden Era
for our industry.
Just take a look at some key trends
emerging right now.
First, people are living longer
and are more affluent…
so they’ll buy more cars
and drive longer
than previous generations.
Second, the U.S. growth rate…
our birth rate, plus immigration...
will be FIVE times that of China…
on a percentage basis…
over the next 50 years.
That means we are adding
one new person every 12 seconds
to our economy.
In addition, four million young people
of Generation Y
are reaching driving age…
each year…for the next five years.
That’s 20 million new drivers
delivered to our doorstep by 2010…
and most haven’t made a brand choice yet.
Fourth…the number of multi-car families
is growing steadily.
Today more than a third
of American households
own three or more vehicles.
Now, that’s my kind of country!
These trends are a golden opportunity for us…
but we have to prepare
because the expectations
of our customers
are radically changing.
I’ve spent the last two years
launching Scion
and learning about Gen Y customers…
and let me tell you…
they are very different
from the boomers…
and even Gen X.
Gen Y is smart…more diverse…
and far less tolerant
of the way we currently do business
than any consumer group in history.
This is a generation
that has grown up
with almost unlimited choice…
and demands options
in everything they do
from morning to late night.
In their “cherry pick” world,
the best products and services
come with a menu of options
that they can choose and configure
to fit their mood and lifestyle.
Gen Y is already having
a profound impact
on key industries like
beverages, fashion and music.
Take Coke, for instance.
When this group was born…
there were only two kinds available…
regular and diet.
Now there’s Coke…Diet Coke…
Caffeine-free Coke…
C2…Vanilla…Cherry…
Coke with Lime… Coke with Lemon…
Coke with Salsa…Coke wi…
OK…
you caught me…
I made up that last one.
But you never know.
There seems to be a Coke now
for every personality.
Gen Y consumers demand…
and generally get…
EXACTLY what they want.
It’s the age of “specialization”.
At Scion…for instance…
we are successfully using
specialized marketing methods
like urban consumer test-drives…
nightclub events…
and tuner car shows…
to take our products
where young consumers are
spending their time.
That way,
they can “discover” our brand
and see how it fits into their lives.
We’re still learning
how to work with this
marvelous new generation of customers …
and you should too.
In five short years,
Gen Y will rival the boomers
in sheer size
and vehicle purchasing power…
accounting for 1 out of every 4 buyers.
We ALL need to be ready.
(Transitional Pause)
Now that we know something
about our changing customers,
let’s talk about how our marketing
can better connect with them.
Let’s face it…
the days of displaying vehicles
and handing out brochures
at an auto show or a special event
have gone the way of the 8-track tape player.
Instead, we need to find ways
to “engage” our customers.
By “engage”,
I mean that we have to
use our creativity
to gain the discretionary attention
of consumers…
then help them focus on our products.
Let me give you an example
using a typical Spring Break promotion.
In the old world,
we might sponsor a big, fancy party
at night
to get exposure for our cars.
It might have done some good,
but the sights and sounds of the party
would divert much of the attention
away from our vehicles.
In the new world,
we might sponsor a breakfast
at Denny’s the next day,
exposing people to our products
when they least expect it…
and have the time to consider them.
The impact is more direct…positive…
and memorable.
In fact, I firmly believe
consumers will richly reward companies
that sweat the details like that
and engage them in surprising ways.
Unfortunately…it’s much easier
to talk about customer engagement
than to do it.
We don’t have all the answers
and neither does anyone else…
so we need to experiment together.
So…….
does that mean TV is dead?
No…not at all.
In fact…with apologies to Mark Twain…
I think stories about TV’s death
are greatly exaggerated.
The question in TV
is not “if” but “what” to buy.
You have to buy programming
based on psychographics.
Why?
Because today’s consumers are
slicing and dicing TV
with tools like TiVo
to fit their specific interests.
So matching your programming
to the passions of viewers
is absolutely paramount.
That’s why “one size fits all” programming
of the past is fading…
and “narrow-cast”
specialty shows on cable
are taking off.
Now…I must admit
however
that it’s a little hard explaining to my Mom
why we advertise on shows like
“Pimp My Ride…
but it works for us…
and I think you will see
more specialized programs and tie-ins.
That’s where
a lot of you come in.
We’re counting on you
to help us adjust the dials just right
and to develop tie-ins
that are smooth and genuine.
There are also
two other important marketing areas
where we can use your help…
promotions…and grass root dealer events.
In many ways,
our dealers are more creative
and more “local” than we are
and we need to better support those efforts.
In fact…the best way to engage customers
most of the time
is really on their home turf…
not on national television.
(Transition Pause)
So,
when you put it all together,
what do all the changes
we talked about
mean?
It means
the challenging industry
and customer revolutions
we’re experiencing now
are not negative trends,
but rather positive signs
of better days to come.
It means there are
TREMENDOUS opportunities
ahead
for marketers willing to try
new approaches.
And it means we can’t look back…
but must boldly move forward
to meet the potential
of this new world order.
Once we realize that…
and respond to it…
there’s nothing that can stop us
from reaching the new Golden Era
of this industry.
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