In 1983 at a top-secret meeting, Toyota chairman Eiji Toyoda suggested that the time was right for Toyota to introduce a true luxury automobile that would challenge the best luxury vehicles in the world. A six-year development process followed that involved 60 designers and 450 prototypes at a cost of over $1 billion. In 1989 the Lexus was launched.
In 1999, Lexus sold its millionth car in the United States and within a little over a decade, Lexus became America's best selling line of luxury vehicles. Following its success in the United States, Toyota introduced the Lexus in markets outside America, and today the luxury cars are available in over 40 different countries. Since its introduction, the Lexus has repeatedly won top awards and accolades for customer satisfaction, dependability, appeal, design, and engineering from the Motoring Press Association, J.D. Power and Associates studies, The Robb Report, Popular Science, Car and Driver, Popular Mechanics, Automobile Magazine, and Motor Trend.
Why has Lexus been such a success? According to North America President and CEO Atsushi Niimi, "Lexus is a success story because there is no compromise in its manufacture, as it always reflects the voice of the customer." Toyota President Ray Tanguay noted, "Manufacturing Lexus demands a deep understanding of what customers want, expect, and deserve in a luxury vehicle. We call it the relentless pursuit of perfection." How did Toyota listen to the voices of its consumers? As early as 1985 while the Lexus was only a concept, Toyota sent a study team to the United States to conduct focus groups with potential customers. More recently, Lexus Great Britain introduced a unique program that helps Lexus consultants better understand customers by giving them a taste of luxury.
Staff from Lexus centers are pampered at top-class hotels in order to experience for themselves the kind of quality and service their customers expect. In another program, Lexus GB gets feedback from actual customers. Thousands of U.K. Lexus owners are invited to spend the day at luxury spa hotels to share their opinions on where Lexus is succeeding and where it could be better, all while enjoying the spa facilities. Such attention to providing the best for luxury car owners has led to Lexus's latest innovation: the Advanced Parking Guidance System. Most consumers find parallel parking a real pain, or worse, they simply avoid parallel parking spaces altogether. Enter the 2007 Lexus LS 460 sedan.
The car actually parks itself-or almost. In theory, a driver only need pull up ahead of the empty parking space, make a few minor adjustments on a computer screen, and lift his or her foot off the brake. As the car backs up, the steering wheel turns as needed, and, "voila," the car is in the space, just where you want it to be. Of course, the LS isn't perfect. It must have a parking space considerably (about six feet) longer than the car, so it isn't useful in those tight city spots. And the system won't work on downward inclines-only on level ground where it can move at a "creeping" speed.
As you might expect, the price of the Lexus with the Advanced Parking Guidance System is over $70,000- not a price tag to be taken lightly. The question many observers ask is whether the parking capability of the Lexus is truly a benefit luxury car owners want and will use-or is it just a gimmick? And were customers really asking for this feature? Some argue that the Lexus automatic parking capability isn't really useful and that Lexus should have waited to introduce the feature until the company had worked out all the kinks in the system. Has Lexus stepped away from its focus on customer needs, and if so, what should the company do now? You Make the Call
1. What is the decision facing Lexus?
2. What factors are important in understanding this decision situation?
3. What are the alternatives?
4. What decision(s) do you recommend?
5. What are some ways to implement your recommendation?