Hey, Hey, We're the Monkees: Scion

Toyota Scion brand overview, November 2007.

"You're trying to make your mark in society,
You're using all the tricks that you used on me,
You're reading all them high-fashion magazines,
The clothes you're wearing, girl,
they're causing public scenes."

Stepping Stone, 1966 pop hit by the Monkees
Written by Tommy Boyce & Bobby Hart

The word Scion means heir, progeny, descendant, next generation. So Toyota's newest brand is appropriately titled.

At the turn of the century, Toyota had a demographic problem. While U.S. market penetration was growing, Toyzilla was losing market share in the entry level youth demographic, where lifetime preferences can form.

As Toyota grew more conservative, the average age of its customers rose.

One key weakness of the Detroit three was their aging stable of brands and the associated baby boom demographic. To succeed in the US, Toyota needed a way to usurp the younger generations and train them to buy Toyotas.

Early efforts to refocus Toyota's image were unsuccessful: anybody remember the super-uncool Echo?

So, determined to "get it", the Japanese carmaker tried a new strategy.

"We're the Young Generation,

and We Got Sumpthin' to Say"

In 2003, Toyota launched Scion, its third brand, featuring three low-priced, feature-laden cars, and a novel marketing program.

The problem for Scion is to build and maintain a fad brand price premium in a very fickle market segment: Generation Y.

Scion is targeted at Gen Y, 65 million Americans born between 1981 and 1995, with a unique peer-based identity and culture.

The 18-24-year-old young male trend-setter subset is Scion's target demographic. This group is attracted to the notion that they can think for themselves, the marketing label is "deviant".

The plan is to build a price cushion and profit from the personalization the group craves.

Marketing studies show Gen Y places emotional attributes above rational elements even more frequently than their parents, the Baby Boomers.

Gen Y buyers need to discover things for themselves, so the Scion brand was designed not to be promoted by big ad budgets, but by grass-roots guerrilla marketing.

Today, the average Scion buyer is 39, the lowest mean age of any brand. There is actually a bi-modal distribution, with peaks at 22-24 years and again in the mid forties.

The problem I see for Toyota is keeping Scions hip: Generation Z, born after 1994, will be hitting college in about 5 years. Fortunately, the company succeeded in building a brand with a price premium without hundred-million dollar ad campaigns.

Still, Scion has to keep running to stay cool, there can be no resting on laurels.

Ok, So I like the ads featuring cool urban free-runners doing the spiderman thing for real, but just how "deviant" is neon cupholder lighting?

To hold the youth market, redesigned models must be offered more frequently. The traditional five- to six-year industry cycle will not be quick enough for fashion-statement cars.

Market Penetration Deliberately Limited

Sales rose from 11K Scions the first year to 173K in 2006.

Despite new products, Scion sales are projected to drop by 10 percent in 2007, to maybe 150K.

This is a halo concept, intended to spill sales over to Toyotas, not steal market from Yaris and Corolla.

Toyota is content to maintain niche scale and "underground" image. TV and print ads don't reach these buyers, so big T uses viral marketing and sponsors night club and art gallery outings.

The main marketing thrust is online. Scion uses natural search as opposed to pay-per-click, to avoid creating suspicion among Gen Y hipsters.

Scion has a website (http://www.want2bsquare.net/) which offers contests, entertainment, videos, and on-line shopping tools.

Scion has also established itself in virtual environments like Second Life, There.com, Gaia Online, and Whyville.

Scion Corporate Culture: The Monkees

Toyota's effort to entrain the youth market reminds me of the 1966 television show that created a rock group, The Monkees.

Producers auditioned for low-priced actors, who could pretend to be musicians, offering a shot at stardom. The Monkees were cute boys who clowned on stage without actually performing music. Even the most clueless teens detected the fraud, but the songs, like the above quoted Stepping Stone, written (and recorded?) by behind-the-scenes talents Boyce and Hart, established a niche for the band.

The corporate lifestyle marketing concept was successful, and today we have institutionalized the create-a-star process with American Idol.

As adults many baby boomers realize the extent to which our "counter culture" was a creation of elite interests rather than "deviance" evolving independently.

Toyota's brand campaign has been successful at giving stogy cars personality, but the product is not as edgy or deviant as Scion ads depict it.

These are restyled and rebadged Toyota economy cars.

Scions are descended from Echos, not Supras.

The boxy Scion xB has been the core model with the widest appeal to Scion buyers.

This year's fattening of the xB outgrew the Yaris platform. Designers chose to support the extra 600 lbs. and 55 more horsepower of a roomier box on Corolla's floor-pan architecture instead.

Telephone booth on wheels?

No, maybe it's a miniaturized 1950's milk delivery van.

But, ain't he hip? Look at that cave man go.

The sporty tC coupe has adequate looks and moderate performance, but is competitively priced.

New for 2008 is the xD Scion, which replaces xA.

The Scion xD is about $1,000 to $3,000 higher than the two Yaris models. This marketing-created price cushion is the key to understanding the current situation with Toyota and Scion.

Scion calls xD "urban subcompact," but to me it looks like a station wagon, which preceded minivans in the race toward un-cool family guy and soccer-mom oblivion.

This Scion xD sure looks like an old-fashioned Toyota, the hippest Yaris around. Check out the strong resemblance to the 2009 Toyota Matrix.

Quality Record

Consumer Reports likes the Scions, with recommended buys on Scion xB and tC.

Infrequent repairs and low repair costs typlify the brand.

JD Power's 2007 Initial Quality Study ranked Scions much lower than other Toyota's and Lexuses. Scion earned 14 stars, matching Saturn and Pontiac, while Toyota turned in a 20, and Lexus was the only brand to score a perfect 25.

Automotive Lease Guide (ALG) gives Scion xA five stars, tC four, and xB three stars for depreciation.

Scions are assembled at Toyota's Takaoka Plant in Toyota City, Japan.

Dealer Network

Toyota keeps Scion sales volume below demand to ensure profitability.

Scion employs a pull system rather than the traditional push method.

Scions are built only when sold, so there is no inventory overhang to cut price.

A centralized inventory pool means buyers will not find rows of Scions awaiting inspection. Tours of Houston Toyota stores find low inventories of everything except SUVs and pickups, with just show-the-flag Scion levels.

Buyers should be willing to wait about a week for a custom-built car. A single-price policy and no incentives produce an average transaction in the low $17K area.

Scions come in a single standard trim level and are intended to be uniquely customized by the dealer.

Scion offers about 40 different dealer installed accessories.

Buyers drop an average of $1,000 on Scion accessories at the dealer, bringing factory and dealer profit margins up.

That is no small achievement: a new small car that turns a profit for dealers.

Scion: I'm Not Your Stepping Stone

But I think Toyota's "want 2 be square" campaign has already maxed out.

Niche brand status and price premium have been achieved, as has Toyota's goal of attracting 20-somethings to dealerships.

Scion works as a laboratory for concepts and products at arm's length from the Toyota brand.

But the stepping stone model has not materialized.

Few Scion buyers have returned to buy upscale Toyota models, and just 1% have moved up to Lexus.

Upper middle class college student gets Scion tC for school, graduates cum-laude, gets first job, trades for Infiniti G37 Coupe, not Camry.

Be there, Toyota, or be square.

And, despite the Scions, Toyotas still are purchased by folks averaging 50-something.

Hey Dude, I'm hip to Scions: high quality, fun, affordable rides.

I'm approaching 60 and I dig the sporty Scion tC.

The built-for-adolescent-social-life xB reminds me of the Volkswagen microbus of my glory days. In spite of Toyota's clumsy promotions, these two cars actually are cool.

And the long list of standard equipment, which includes side curtain air bags, makes Scions a true bargain.

But I think Toyota CEO Katsuaki Watanabe and his fellow gray-suited corporate executives have fallen short of the goal of molding the youth culture toward too-conservative Toyota.

I can conceive of a future less kind to Toyota:

"Like General Motors before them, Toyota held the power to transform the future, but they used it in a hopeless attempt to preserve the past."

Toyota should embrace the future, rather than resisting fuel economy standards that could destroy its Detroit competition.

Instead of trying too hard to make existing cars hip, Big T should offer the youth market progressive technologies and cast them as cool.

As Ford has demonstrated, anybody can put lighted cup holders that change colors in a car. Ho-hum.

The Gen Y emotional connection at the Toyota/Scion dealership cannot be achieved by concerts and viral marketing, especially with today's busy, and many say arrogant, Toyota stores.

"When I first met you, girl, you
didn't have no shoes,
But now you're walking 'round like
you're front page news,
You've been awful careful 'bout
the friends you choose,
But you won't find my name in
your book of Who's Whos"

News-Blog Updates for Scion

Product Reviews

Scion Dealer Profiles