When Product Managers Fall Down: What’s Happened To Lexus?

by drjim on August 22, 2011

What To Do When Your Product Starts To Fall Down?

What To Do When Your Product Starts To Fall Down?

Of the past 20 years or so, one of the best product management jobs to have in the United States had to be a product manager who was responsible for one of Toyota’s Lexus’ brand’s cars. These cars have been selling very well for a long time and have been very respected in the marketplace. However, it looks like things are starting to change and the big question is what should the Lexus product managers do now…?

When Lexus Ruled The World

Before we can talk about how things went wrong over at Lexus, we need to first talk about how they went so very right. Back in 1990 Toyota, which had always been known for great low-priced cars, introduced its high-end Lexus line. The cars were well received and their legendary reputation for quality made them fly off of dealer’s lots. At this time the other luxury cars, BMW and Mercedes, were struggling with quality and so Lexus really stood out.

In just 10 years Lexus became the best-selling luxury car brand in the U.S. At the same time it stated to contribute 50% of Toyota’s U.S. profits. Not bad!

Why Things Went Wrong

Product managers know that nothing ever stays the same. In the world of luxury cars this is especially true. The past year has been brutal for Lexus product managers. Things first started to go bad for them when Toyota had to recall some Lexus cars due to an unintended acceleration problem that appeared to be caused by faulty floor mats.

Things went from bad to worse when Japan suffered a massive earthquake on March 11, 2011. This caused Lexus plants in Japan to be shut down and this threatens Toyota’s ability to sell enough cars to retain its #1 ranking in car sales volume.

Just to make the product manager’s lives even harder, the Lexus models are starting to show their age. They were last “refreshed” all at once back in 2006-2007 when Lexus was making a big push into Japan, Europe and China. Now in comparison to their rivals, the Lexus products are looking old and dated.

What Lexus Product Managers Should Do Now

Lexus product manager have a real challenge on their hands (does any of this seem vaguely familiar to you?) They are saddled with old products and are still dealing with the fallout from some negative publicity. What they need to do is to divide time up into two parts: before the new models arrive and after the new models arrive.

Before the new Lexus models arrive (perhaps as long as a year), the Lexus product managers need to find fresh ways to communicate what they already have. Their best potential customers are going to be those Lexus owners who have not upgraded to the current models. The product managers need to come up with ways to motivate these drivers to check out the current models and they need to create incentives that will cause them to buy.

Once the new Lexus models arrive, the Lexus product managers need to treat it as a new birth of the Lexus brand name. Create a clear division between the 2010-2011 troubles that Lexus faced and the new 2012 models that are in the showrooms. Customers will quickly forget the issues and can be convinced to once again to view Lexus the way that the product managers want it to be viewed: as a high quality luxury brand.

What All Of This Means For You

As product managers we all hope that at some point in time our products will become themarket dominating productsthat we all hope that they can be. However, as Lexus as shown us, once this happens there’s only one way for us to go: down.

When this starts to happen, as product managers we need to be ready for it and we need to take actions to stop it from occurring. Lexus product managers need to take two steps to stop their tumble. They need to convince existing customers to upgrade to the current models and they need to create a program that will allow Lexus to be “re-born” once the new models arrive.

The most important point for all of us to learn from Lexus’ troubles is that just because a product falls from its once mighty perch, does not mean the end of the product. Rather, this should be treated as a very natural occurrence that could happen to any of us. The most important thing for product managers is to be able to recognize it when it occurs and to know what steps to take to turn things around…

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

Question For You: What do you think the Lexus product managers’ first step to save their products should be?

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What We’ll Be Talking About Next Time

As product managers we try very hard to make sure that our products have all of the features and functionality that our customers want and need. In order to get our customers to purchase our products we attempt to make our products look like the type of product that they’d be proud to own. This all seems to work pretty well with one exception. We’ve all been told that if our product’s reputation gets damaged, we can expect to see customers walking away from our product in droves. In this day and age, is this still true – does a product’s reputation really matter?

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