Published on: August 18, 2015by Michael Sansolo
Lexus announced a marketing change recently that is notable both for what the automotive company is doing and how they did it - because in both cases there are implications for every other company.
Let’s start with the idea: Beginning in 2016, Lexus is going to experiment with a new and (to my mind) long overdue pricing model. Instead of the traditional dance with the car dealer, Lexus is going to a no-haggle pricing policy. The price is the price.
Now this is hardly a new idea. Straightforward pricing has fueled growth for CarMax and countless other dealers around the country. Today, car buyers are easily capable of entering a showroom armed with every bit as much price and cost information as the salesperson. Haggling brings little upside.
Lexus’ decision recognizes this reality and growing importance of Gen X and Millennial shoppers. Both have grown up in the information age and see no joy in the strange pursuit of deals when car shopping. Making this pricing shift, Lexus hopes, will make the company increasingly relevant for the younger generations.
There’s an easy parallel for an important discussion in the food industry: Will this same quest for transparency fuel renewed interest in everyday low pricing, especially as consumers have more information about every product they buy and more options about where to buy?
On the bright side, that Lexus, a luxury car company, is planning for Gen X and Y shoppers provides an interesting counterpoint to constant discussion of the financial woes of the younger generations. The simple truth is that no consumer group is monolithic - many in the younger generations continue to struggle with student debt and low wages.
However, some are going to do just fine or better and as they age will continue to want upscale items and enhanced experiences.
Yet here’s the other interesting aspect of the Lexus decision. According to reports, the idea came from a special group of Lexus deals called the “groundbreakers.” These are dealers the company identified as showing a pattern of innovative decisions.
That should get us thinking too, about how companies should form their own groups of groundbreakers or innovators to help guide strategic decisions.
We all know we can get tremendous insights from the front lines, especially since the people there tend to be younger and more diverse than top management. Let’s be real: the younger generations of shoppers looks a lot more like those folks too.
Creating groundbreaker groups could lead to fabulous insights for any company in any industry. It could create new ideas, new energy and certainly a ton of competition to get inside one of those special groups.
And to be clear, this must be done with a far different climate than the one that reportedly exists at Amazon, at least according to the New York Times story that Kevin wrote about yesterday. (There's more on this story below.)
Innovation teams can produce great insights, but only if well directed.
Sounds like a good path to get into high gear.
Michael Sansolo can be reached via email at email@example.com . His book, “THE BIG PICTURE: Essential Business Lessons From The Movies,” co-authored with Kevin Coupe, is available on Amazon by clicking here. And, his book "Business Rules!" is available from Amazon by clicking here.
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