Ben Wise on Branding

Watching the world through the lens of the brand

Lexus Saved By Toyota’s Brand Portfolio

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Large companies often debate if their expansion should be done through brand extensions or by launching new brands. There are strong arguments for both. Brand extensions let you leverage an existing brand into a new product or category with much less investment in marketing and brand awareness. Conversely, a new brand can let you go after a drastically different value proposition. Additionally, any damage to the brand is relatively limited from other brands in the portfolio.

It is this last point that has become apparent recently in the case of Toyota. As this blog (and most other business or branding blogs) has noted, the Toyota brand has taken a beating amid the unprecedented product recalls. Amazingly, the Lexus brand, owned completely by Toyota, hasn’t suffered.

A New York Times article says that Lexus sales are up 5% so far in 2010, in line with the average for luxury car brands. Toyota sales, on the other hand, are down 15%.

The recent success of the Lexus brand was only made possible by being distanced from the Toyota brand, despite being the same company.

This is a great example of the benefits of a brand portfolio. The combination of Lexus and Toyota allows the company to credibly play in the mainstream and luxury markets while protecting each brand from any problems experienced by the other. Had the problems been primarily with Lexus, the Toyota brand would have likely been fine.

What do you think? Will the Lexus brand be hurt by Toyota’s problems?

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Written by benwisebranding

March 12, 2010 at 9:37 pm

Posted in Brand Portfolio

Tagged with , ,

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