Scion, offshoot of Toyota and heir to the fortune, is dead. Sometimes criticized for its ugly appearance: “A car which can easily be mistaken for an abandoned fridge when parked,” it tried hard to be one of the cool kids. But, in the end, it didn’t make enough young friends, it cost its parents too much money, so they killed it.
The Scion brand’s demise is a reminder of the earlier death of Saturn, launched as “a different kind of company, a different kind of car,” also axed by its parent. Both car brands show the difficulty of sustaining new brands in a portfolio where they have to compete for investment resources against more established brands. The cultural resistance should not be underestimated, especially in the case of brands like Scion and Saturn, both set up to challenge the status quo and represent something new and different. That inspires the old and the same to put up a fight and find ways to undermine the business.
The Demise: Cause And Effect
Contrast Scion’s failure against Lexus’ success. How did Toyota, a company with a decidedly mainstream reputation, succeed in launching a premium brand in a very competitive segment but fail with Scion? First, the internal dynamics were different, less cultural resistance against a brand that took the company upscale and represented best in class. Also, the positioning was easier. Scion was targeted against young people and tried to cater to their fickle and fast-changing tastes. Lexus was targeted against people with money in a category with well-established markers for premium, quality and performance.
Another contributing factor may have been how Toyota managed the brand architecture and the degree of separation from the mother ship for the two brands. Lexus has always been completely separated from Toyota. It has its own dealerships, and there’s no Toyota branding. That’s the same approach that other premium brands both in the car category (Acura, Infiniti) and outside the category (Ritz Carlton) have used. These premium brands exist because companies recognize that there is a limit to the upscale stretch of a mainstream brand like Toyota, Honda or Marriott so, if they want to effectively compete in the premium market, they need new or acquired brands that don’t associate strongly back to the parent.
Scion, on the other hand, was a “value brand.” Here the calculation around the appropriate distance with the parent brand is different. Value brands often benefit enormously from association with the stature, quality and reliability of their parents. The main consideration is the potential risk to the parent’s reputation.
This dilemma is often resolved by using a parent brand endorsement. Fairfield Inn, by Marriott and Woodbridge by Robert Mondavi are just two examples. Sort of like a parent signing for one of their children. But what was interesting about Scion was that its relationship to Toyota wasn’t stated via its branding. It was demonstrated by the fact that Scion cars were sold at Toyota dealerships. I always thought that was a neat solution to the association challenge. But now that Scion is done and gone, I wonder if, in fact, that was one more contributing factor in its demise. It never could fully escape its parent’s grasp, always needed its support and gradually starved to death when that support was not forthcoming.
R.I.P. Scion, may other brands learn from your fate.
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