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?