Solution to the Lexus case study

Decision problem:
What should be done to stop the falling sales of Lexus cars?

Research problem:
Are Lexus cars perceived by customers as luxury cars?

Graphical model depicting buyer behavior in luxury car market

Unsatisfied
needs

Financial
means

Antecedents of
purchase process

Controllable factors:

Decision to shop for a

luxury car
External factors:

- Product features
- Promotional strategy
- Distribution system
- Pricing policy

Initial analysis of available

options and short-listing of
the most attractive car
makes and models

Brand image and awareness

Detailed comparison of
short-listed options

Final purchase decision

Marketing strategies, brand

image and awareness of
competitors offerings

Research questions and hypotheses:

RQ 1: Are Lexus cars perceived as equally luxurious as the competitive European makes?
H 1.1: Lexus brand is not perceived as equally luxurious as the European makes.

RQ 2: Is the look and feel of dealerships and the way the sales process is conducted strengthening the
positioning of Lexus as a luxury brand
H 2.1: The sales process is perceived by majority of customers as exceptional and pleasurable
experience.
H 2.2: The dealerships are viewed by most customers as exclusive and luxurious.

RQ 3: Are the prices of Lexus cars consistent with the luxurious character of the brand?
H 3.1: The prices of Lexus autos are considered by most customers as adequate to the offered value.
H 3.2: The prices of Lexus autos are associated by majority of customers with a luxury car image.

RQ 4: Is the current promotional policy strengthening the image of Lexus as a luxury car?
H 4.1: The current advertisements focusing on engineering quality of Lexus are effectively building the
image of a luxurious car as compared to alternative more emotional promotional measures.
H 4.2: The intensity of promotional campaign is sufficient for potential customers to be able to
familiarize themselves with Lexus offer.
H 4.3: The media mix used in the promotional campaign allows the promotional message to reach the
majority of target group members.
H 4.4: The nature of media used in publishing and broadcasting advertisements is consistent with the
luxurious character of the brand as perceived by most target group members .

RQ 5: Is engineering quality of Lexus comparable to the offerings of European luxury car producers?
H 5.1: Lexus cars are more reliable then the cars of other luxurious makes.

H 5.2: Experience of driving a Lexus is more pleasurable as compared to the cars of other luxurious
makes.
H 5.3: Lexus cars are equally dynamic and fast as the cars of other luxurious makes.
H 5.4: Prospective customers are aware of high technical quality of Lexus cars.

RQ 6: Is the design of Lexus cars consistent with the image of luxury?

H 6.1: The design of Lexus cars is more preferred by potential customers relative to other cars of
luxurious image.
H 6.2: The Lexus style is considered by customers as luxurious.