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Why Lexus's Business Model is so successful?

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Lexus’s Company Overview


Lexus is a high-end automotive company that is a division of the globally renowned Japanese automaker, Toyota Motor Corporation. Established in 1988, Lexus has positioned itself as a leading luxury vehicle brand, renowned for its commitment to quality, innovation, and superior customer service. The company's diverse product line includes sedans, SUVs, and hybrid vehicles, all of which embody cutting-edge technology, sophisticated design, and top-notch performance. Lexus operates globally, with a strong presence in markets such as North America, Europe, Asia, and the Middle East.

The business model of Lexus is centered around manufacturing and selling premium vehicles. The company invests heavily in research and development to continually innovate and improve its products, ensuring they remain at the forefront of luxury and technology. Lexus also places a strong emphasis on customer service, providing a comprehensive suite of services that enhance the ownership experience. This includes regular maintenance, roadside assistance, and personalized services.

Lexus's revenue model primarily revolves around the sale of its luxury vehicles. The company generates a substantial portion of its income from the direct sale of new vehicles to dealerships, which then sell these vehicles to the end consumer. Additionally, Lexus also earns revenue from the sale of certified pre-owned vehicles, parts, and accessories. The company's focus on after-sales services also contributes to its revenue, providing services such as vehicle maintenance, repairs, and extended warranties. Furthermore, Lexus has also embraced the trend of vehicle leasing, providing customers with flexible financing options, which has become another significant revenue stream.

https://www.lexus.com/

Lexus’s Related Competitors



Lexus’s Business Model Canvas


Lexus’s Key Partners
  • Toyota
  • Vente-Privee
  • Bridgestone
  • Trust Bank
  • Total Lunar Design
  • University of California Irvine
  • Salesforce
  • BASF
  • Yahoo
  • Pan-European digital partnership with Yahoo.com
Lexus’s Key Activities
  • Sales
  • Performance evaluations
  • High quality
  • Marketing
  • Design
  • Manufacturing
  • Engineering
  • Branding
  • Financial services
Lexus’s Key Resources
  • Toyota's wealth & Experience
  • Toyota has vowed to make Lexus the world's top-selling luxury car brand by 2020
  • High-quality
  • Engineering
  • Design
  • Quality and Leading-edge technology
  • History of a leading company
  • Manufacturing Platform
  • Logistics system
  • Supply Chain
  • Production process
  • Quality control
  • Employees
Lexus’s Value Propositions
  • It is one of Japan’s largest automobile manufacturers and was the world’s biggest producer of hybrid cars
  • Style
  • Value for price
  • Performance
  • Quality
  • Stability
  • Low depreciation on the used-car market
Lexus’s Customer Relationships
  • ‘Takumi’ craftspeople work to the most exacting standards to create new levels of Advanced and engaging experiences in each vehicle
  • The ‘Encounters with Anticipation’ installation by Design Studio was a playful and interactive expression of the brand’s imaginative ethos
  • Free Shuttle Service: In addition to traditional rental services
  • Pre-order Apple Pay app for its RX and NX crossover vehicles
  • Technology
  • Quality
  • Design
  • Engineering
  • Specialized team
  • Personal assistance
  • Dedicated Promotion and Offers
  • Individual
  • Test drives
  • Phone
  • Chats
Lexus’s Customer Segments
  • Ageless achievers
  • Discerning professionals
  • Leading personalities
  • Captains of industries
  • Politicians & Diplomats
  • Rich & Famous
  • Sport Heroes
  • Global Influencers
Lexus’s Channels
  • Website
  • Dealers
  • Showrooms
  • Help
  • Info
  • Email
Lexus’s Cost Structure
  • Overheads
  • Design
  • Manufacture
  • Technology development
  • Marketing
  • Branding
  • Logistics
  • Intellectual property + Licensing fees
  • Training
  • Wages
  • Leasing
Lexus’s Revenue Streams
  • Sales of luxury cars and SUVs
  • Spare parts
  • Accessories
  • Extended warranties
  • Financing and Insurance
  • Maintenance and repair

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Lexus’s Revenue Model


Lexus makes money by combining different business models. Below, you will find the list of the different monetization strategies identified for this company:

  • Direct selling
  • Supply chain
  • Make and distribute
  • Lease
  • Rent instead of buy
  • Add-on
  • Customer loyalty
  • Experience selling
  • Ultimate luxury
  • Product innovation
  • Culture is brand
  • Best in class services
  • Ingredient branding
  • Technology trends
  • Corporate innovation
  • Take the wheel
  • Sharing economy
  • On-demand economy
  • Digital transformation
  • Low touch
  • Acquiring non customers
  • Decomposition
  • Archetypes of business model design
  • Subscription
  • From push to pull
  • Codifying a distinctive service capability
  • Aikido
  • Sustainability-focused
  • Augmenting products to generate data
  • Blue ocean strategy
  • Enterprise unbundled
  • Membership club
  • Knowledge and time
  • Pay as you go
  • Digital
  • Brands consortium
  • Cross-subsidiary
  • Experience
Analytics


Market Overview
  • Patterns
  • Sectors
  • Categories
  • Companies
  • Right click on the nodes to explore

Lexus’s Case Study


Lexus's CASE STUDY

When Lexus emerged onto the luxury automotive stage in 1989, it faced stiff competition from established European brands. Today, it stands as a stunning testament to perseverance, exceptional quality, and innovation. As a division of Toyota Motor Corporation, Lexus's ascent to the zenith of the luxury automotive world is a compelling narrative, blending masterful engineering with an unmatched commitment to customer satisfaction.

Establishing a Brand Identity

From its very inception, Lexus aimed to craft not just cars, but experiences. The company's unwavering dedication to superior craftsmanship is rooted deeply in the Japanese philosophy of "Takumi," where master craftspeople dedicate decades to honing their skills. This commitment to artistry is palpably felt in every seam, stitch, and surface of a Lexus vehicle. Our vehicles' hallmark innovations are in performance, style, and unsurpassed comfort. This distinctiveness attracts a varied clientele, from discerning professionals to global influencers. Lexus's commitment to creating an emotionally rich driving experience is encapsulated in phrases like "The Pursuit of Perfection," which reverberate through its marketing campaigns.

The Lexus Edge: Quality and Innovation

According to Consumer Reports (2022), Lexus has held the top spot for vehicle dependability for eight straight years. This unparalleled reliability is no accident; it's a result of meticulous planning and rigorous testing. Toyota's immense wealth of experience supported Lexus's ability to innovate rapidly and assuredly. One of Lexus's most distinguishing features has been its precursor role in hybrid technology. Lexus remains the largest producer of luxury hybrid vehicles in the world. With over 1.5 million hybrid vehicles sold globally (Toyota Global Newsroom, 2021), Lexus's environmental commitment aligns seamlessly with consumer demands for sustainability and efficiency.

Innovative Revenue Streams

The revenue model for Lexus has always leaned heavily on the sale of its luxury sedans and SUVs. However, the diversification of revenue streams has also been a critical factor. The certified pre-owned segment, accessories, extended warranties, and maintenance services cumulatively contribute to a sizeable chunk of income. Leasing options have emerged as a significant alternative to traditional car ownership models. Offering flexibility in financing has attracted younger, more dynamic customer segments looking for luxury without the long-term commitment. This diversification helps insulate the brand from market volatility and broadens its appeal.

Customer Experience: The Heart of Lexus

Lexus isn’t just about selling cars; it's about selling experiences. The emphasis on best-in-class services extends beyond the showroom floor. Personalized customer services like regular maintenance, roadside assistance, and exclusive ownership programs add layers to the brand’s value proposition. In 2019, Lexus introduced the "Lexus Encore" program in Australia and the UK, a membership club that offers unique privileges such as invitations to exclusive events and luxury hotel partnerships (Lexus Pressroom, 2019). This builds a deeper connection with the customers, fostering loyalty and repeated business.

Global Strategies and Market Penetration

The global footprint of Lexus extends across North America, Europe, Asia, and the Middle East. Its strategic partnerships, such as those with Yahoo.com for digital marketing and Total Lunar Design for advanced engineering, showcase Lexus's relentless push for growth and innovation. While it dominates the North American market, capturing a significant share of the luxury segment, its strategies in Europe and Asia focus on customization and localized experiences. For instance, in China, Lexus offers hybrid models that appeal to eco-conscious consumers (China Daily, 2022).

Challenges and Future Prospects

Despite its runaway success, Lexus faces challenges in an industry undergoing transformative shifts. Autonomous driving technology, electric vehicles (EVs), and evolving consumer preferences necessitate constant evolution. Lexus has been forthright in its efforts, investing over $2 billion in R&D for EVs and autonomous technologies (Toyota Annual Report, 2022). Moreover, the COVID-19 pandemic, while posing logistical challenges, also underscored the importance of a robust digital presence. Lexus responded promptly by enhancing online sales platforms and introducing a virtual showroom experience.

Conclusion

Lexus's story paints a vivid picture of a brand that has masterfully blended heritage with innovation. From pioneering hybrid technology to providing unparalleled customer experiences, Lexus embodies the pursuit of perfection. As we move forward, Lexus faces the dual challenge of sustaining its legacy while paving the path for future advancements. With its unwavering commitment to quality, luxury, and customer satisfaction, there is little doubt that Lexus will continue to be a formidable player in the luxury automotive market for years to come.


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