Goodbye Scion – What Happened To You?

by drjim on April 24, 2017

The Scion brand is being retired by Toyota

The Scion brand is being retired by Toyota
Image Credit: Aaron Van Dike

You would think that if you became the product manager of something as big as an automobile, you’d be set for life. I mean, if the company is going to go to the effort of rolling out a new car model, then you’d think that they would be so committed to it that your job is secure for the next 10 years or so. However, as Toyota’s Scion product managers are discovering, sometimes this is not the case.

The History Of Scion

You might be asking yourself “just what the heck is Scion?” If this is what you were asking, then you would not be alone. Scion was a separate brand that Toyota created way back in 2003. The brand was sold in the United States, Canada, and Puerto Rico. Toyota created the Scion brand in order to attract younger buyers. They were also looking for a way to try out experimental sales techniques such as no-haggling prices.

When the Scion brand was initially launched, Toyota included two models: the subcompact hatchback xA and the XB. It turns out that the XB, which had a very boxy look and feel to it became a big hit. The next model that Toyota introduced was the tC sports coupe. This model went on to become Scion’s best selling model. Scion had it’s greatest number of sales during 2006. This is the year that they sold over 173,000 cars. Now that’s something to put on your product manager resume!

The reason that Toyota created the Scion brand was to allow their Toyota dealers to become stronger by learning how they could both attract and engage younger buyers who might not be attracted to the Toyota brand. Overall, this goal was accomplished. At the time Toyota was targeting the Generation X buyers and the Scion brand offered them a differentiation from the Toyota core line of cars. This was important to them. The average age of a Scion buyer is 36 – roughly 20 years younger than the age of the average car buyer.

Why Toyota Is Shutting Scion Down

All of this leads to the interesting question: so why is Toyota doing away with their Scion brand? One of the reasons is because sales have been dropping off. Ever since hitting a high in 2006, sales have been on a slide. Last year, only 56,167 cars were sold. Note this is with seven different models and is much less than the 100,000 cars that Scion sold in 2004 with only three models. Additionally, last year most car brands sold more cars than they did in the previous year – except for Scion.

Another problem that the Scion brand had encountered was that the types of cars that they were selling, small cars, are not as attractive to buyers right now. Since gasoline prices have been falling, buyers are now tending to favor cross-overs and trucks. This is a similar problem to the one that General Motors faced back in 2009 with their Saturn brand. The purpose of that brand was to attract younger buyers and try out new sales techniques. However, General Motors eventually decided that it was too costly to develop new models for the brand considering how few sales they were having.

One additional problem that the Scion product managers were facing was that their customer base was changing and it no longer matched their product development definition. The Scion brand had been created to appeal to younger customers. The original target audience, the Generation X buyers, valued the differentiation between the Scion and Toyota brands. However, now the millennials are just starting to enter the market. This type of customer does not value the differentiation as much. In fact, the Scion brand was appearing to cause confusion in these buyers as they tried to determine where Scion fit into the car manufacturer marketplace. The Toyota product managers now believe that the Toyota brand is going to be able to fully satisfy all of the things that the Scion brand had been set up to take care of.

What All Of This Means For You

As product managers one of the things that we generally rely on is that our product won’t be going away any time soon. If you were in charge of an auto manufacturer’s brand and models, based on your product manager job description you’d feel pretty good about your ability to continue to offer your product for quite some time. However , the Scion product managers are discovering that this is not always the case…

The Scion brand was created by Toyota back in 2003 so that they could reach out to younger buyers and try out new sales techniques. The Scion brand started out with two models and eventually increased that to seven different models. Their best year for sales was back in 2006. However, after that sales started to drop off. People are buying cross-overs and trucks these days, not small cars. Scion was not helped by the fact that the new shoppers, the millennials, really don’t require the Scion brand to be separate from the Toyota brand.

The Scion product managers had to have seen this shut down coming. Hopefully they’ve had enough time to work with the Toyota product managers to prepare to fold the Scion models into the Toyota brand. Although the Scion brand may no longer exist, going forward the Scion models will continue to be sold under the Toyoda brand. Looks like our Scion product managers will still have jobs!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think retiring the Scion brand was the right decision or should Toyota have tried to rejuvenate it?

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What We’ll Be Talking About Next Time

I seem to recall that there is a type of fish that attaches itself to sharks, I think that it’s called a remora. This fish then gets access to all of the leftovers when the shark feeds. Not a bad relationship, eh? In the U.S. gas station business, there is a company called Murphy USA that has been in a partnership with Walmart for a long time. When Walmart would build a new supercenter, Murphy USA would show up and build a gas station out in the parking lot. This relationship served both companies well for a number of years. Now Walmart has decided that they no longer need Murphy USA. What are the Murphy USA product managers to do?

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Whole Foods needs to carefully make some big changes

Whole Foods needs to carefully make some big changes
Image Credit: Jeremy Brooks

Whole foods is a grocery store chain. It’s actually a pretty special grocery store change and if you talk to any of the people who shop there, you’ll quickly discover that most of them are true believers in the company and the products that they carry. For the past few years, Whole Foods has been growing like crazy; however, lately things have been slowing down. What’s a Whole Foods product manager to do?

The Power Of Centralization

As product managers, one of the things that we are always taking a look at is how to drive cost out of the process of creating and selling our products. Over at Whole Foods, with a few bad quarters on the books, their product managers are starting to take a careful look at how their product, the grocery store, is being delivered and they are trying to determine how they can do it for less by changing their product development definition. One of the most obvious things that has shown up is that very little of what Whole Foods does currently is centralized and so the thinking is that by centralizing certain functions they may be able to get better deals and make the individual stores more efficient.

One of the big motivations for making changes in how Whole Foods runs its stores is that for the first time they are facing some serious competition. Other stores that sell groceries such as Kroger and CostCo have seen the success that Whole Foods has had selling organic and locally grown foods and they have boosted their offerings of these types of products. In order to make their offerings different from Whole Foods, they have been lowering their prices. This has resulted in Whole Foods customers going to these other stores to buy the types of foods that Whole Foods initially introduced them to.

In order to reduce costs and streamline their operations, the Whole Food product managers want to shift the responsibility for purchasing nonperishable items (packaged foods, dish detergent, etc.) to the company’s headquarters. Previously store managers were responsible for coordinating these purchases. Additionally, store managers currently use very little automation and do a number of tasks by hand. The product managers want to deploy software that will automate the process of scheduling workers and determining what needs to be purchased in order to replenish the store’s shelves.

A Delicate Balance

All of this change sure sounds like the kind of things that we’d all like to add to our product manager resume. However, in the case of Whole Foods it turns out that things may not be so easy. One of the things that sets the Whole Foods grocery apart from other grocery stores is that they offer local flavors and specialty offerings. The product managers are looking for ways to remove the redundancy and waste that is currently in how Whole Foods does things, but at the same time they want to be careful to not diminish the company’s culture.

When you talk with Whole Foods’ customers in order to determine how they view the grocer, you’ll quickly start to hear just how much they value the company’s customer friendly staff. As the product managers try to pull a number of different functions back to headquarters in order to centralize them, they are going to have to be careful that they don’t damage this relationship with their customers. The people who currently shop at Whole Foods put a high value on being able to find items such as local products. Centralization may diminish a store’s ability to provide products like this.

The product managers acknowledge that they have a challenge on their hands that may not have been covered in their product manager job description. Grocery stores are always struggling with the balance between trying to lower costs while at the same time trying to maximize the amount of local food content that is in a given store. Whole Foods stores have a reputation for being a high quality location for local content. This is a reputation that they need to make sure that the changes that they are planning on making won’t damage.

What All Of This Means For You

Whole Foods grocery stores are loved by their customers. Their extensive local food content and friendly staff has made grocery shopping enjoyable for people. However, the arrival of new competition means that the Whole Foods product managers now need to find ways to reduce the cost of offering Whole Foods products.

The product managers are viewing a number of changes to the way that Whole Foods operates in order to drive down costs. The first of these is to centralize the purchasing of a number of nonperishable items. They are going to have to be careful to make sure that this doesn’t change the local store’s ability to source and offer local items. Additionally, new software is going to be introduced to speed up a number of mundane tasks. Once again Whole Foods is going to have to make sure that the company’s character is not changed by these changes.

Whole Foods has a good thing going. Since they currently have very little centralization and automation, any changes in these areas can only serve to help the company to reduce their operating costs. However, as they make these changes they are going to have to be careful to make sure that they don’t damage what has made them both special and unique to their existing customers. Change is never easy, but the Whole Foods product managers need to accomplish these changes and leave the company with a good taste in its mouth.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that the Whole Foods product managers should attempt two big changes at the same time or just do them one at a time?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

You would think that if you became the product manager of something as big as an automobile, you’d be set for life. I mean, if the company is going to go to the effort of rolling out a new car model, then you’d think that they would be so committed to it that your job is secure for the next 10 years or so. However, as Toyota’s Scion product managers are discovering, sometimes this is not the case.

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