Fortification - the brand should carry a consistent image over time to reinforce its place in the consumer's mind and develop a special relationship with the consumer. Brand extensions can further fortify the brand, but only with related products having a perceived fit in the mind of the consumer.
A company may have many brand names, but each group should fit well together. When Toyota wanted to compete in the luxury car market, a new brand called Lexus was created. This avoided muddying the established Toyota brand name, which represents value and economy, and removed any possible negative preconceptions about the Lexus name being cheap.
The divergent fortunes of two automobiles made by the same manufacturer offer an unintended study of the power of brand strategy to alter behavior. Since 1989, both the Toyota Corolla and the Geo Prizm have been made by New United Motor Manufacturing Inc. (NUMMI), a joint venture of General Motors and Toyota. While the two cars are virtual twins, the Corolla has had consistently stronger sales despite a higher price. How come "The strength of Toyota's brand allowed it to charge more," says The Economist. "Buyers thought a Toyota would be superior to a GM car in the same class, and so happily paid more."
The effect of brand equity on profit and growth is striking. ...
"Buyers thought a Toyota would be superior to a GM car in the same class, and so happily paid more."
The effect of brand equity on profit and growth is striking. While both cars cost the same to make-about $10,300-Toyota sold 200,000 Corollas to dealers at $11,000 each, while GM managed to move only 80,000 Geo Prizms at $10,700 between 1990 and 1994, The Economist notes. The result: "Toyota made $128 million more than GM in operating profits from NUMMI, while its dealers made $107 million more than those of GM from the plant's products."
Toyota Motor Corp. (TM ) is on pace to be the world's No. 1 auto maker by 2008. It produces nearly one of every six cars sold in the U.S., including nine models in the South and Midwest, where it employs 32,000 Americans. Even New York livery cab fleets, once largely made up of leathery Lincolns, now feature Toyota's Prius, the hit hybrid taking coastal cities by storm.
Toyota largely remains "terra incognita" to American investors, while GM can still attract buyers even as it flirts with bankruptcy. "Toyota stock doesn't have the 'mind share' of GM or Ford," says John M. Novak, an auto analyst at Chicago's Morningstar Inc. "There's a perception that you can't invest in it [because] it's a Japanese company -- that you would require a special account." ( Business week)
In 2003 Toyota knocked its rivals Ford into third spot, to become the World's second largest carmaker with 6.78 million units. The company is still behind rivals General Motors with 8.59 million units in the same period. Its strong industry position is based upon a number of factors including a diversified product range, highly targeted marketing and a commitment to lean manufacturing and quality. The company makes a large range of