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Lexus Brand and Advertising Tracking Study

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  1. Lexus Brand and Advertising Tracking Study Quarter 1 January- March 2006

  2. Agenda 1 2 Research Objectives & Methodology What is Lexus’ Status Among Luxury Vehicle Intenders? Does the Advertising Break Through and Communicate on Strategy? • Collision, DSE Lamppost, DSE Online Points for Discussion Appendix 3 4 5 1 Hall & Partnersµ Brand and Communications Research

  3. Research Objectives Purpose of the Study: • To explore and track brand imagery and purchase consideration for luxury automobile manufacturers, as well as examine response to recent Lexus advertising. Specifically: • Does the advertising break through and is it linked to Lexus? • Does the advertising communicate to strategy? • How is the advertising resonating among recognizers? • On what level is the advertising working to elevate the brand? Research Objectives for this Report: • Examine changes in the relationships consumers have built with Lexus and relevant competitive brands in the marketplace this quarter. • Examine how the current Lexus advertising is working to develop these relationships and reach the brand’s goals. 2 Hall & Partnersµ Brand and Communications Research

  4. Methodology methodology 20 minute computer assisted telephone interviews on brand attitudes and media habits followed by a 15 minute online questionnaire on advertising sample size 400 phone interviews per month/approximately 125 online interviews per month Primarily or equally involved in automotive purchase or lease decisions in the household Intend to purchase or lease a new luxury car (sedan, coupe, sporty coupe, wagon or hatchback) or luxury SUV within the next 24 months interview dates 3 January 1st, 2006- March 31st, 2006

  5. Lexus & Key Competitors 2 What is Lexus’ status among Luxury Vehicle Intenders?

  6. Overall Lexus maintains its position as the front runner in the luxury category and continues to lead the category in consideration Lexus continues to have a strong QDR reputation particularly dominating in reliability. Lexus’ personality is defined as contemporary, inspired, progressive, and caring

  7. Lexus significantly leads all brands in the luxury category for consideration. Other brands continue to experience declines in ad awareness and consideration, while BMW performs slightly stronger on unaided awareness and consideration Performance Across Brand Measures: JAN-MAR 2006 Base: total    Base: Awareness/General Consideration – (1195) : Asked of Car Intenders (896)  : Asked of SUV Intenders (299) Base: Scaled Consideration –- Lexus (1161); Acura (1120); Audi (847); BMW (1133); Cadillac (1142); Infiniti (1102); Jaguar (844); Lincoln (263); Mercedes (1132) /: Significantly higher/lower than Jan – Mar 05 at 95% confidence level /: Significantly higher/lower at 95%+ vs. Lexus

  8. Lexus maintains a strong reputation in the category across nearly all attributes, particularly on QDR and service attributes. Though gains are being made, Lexus struggles to compete with BMW on perceptions of performance Reputation: JAN-MAR 2006 Base: total aware of brand Base: Total Aware of Brand –Lexus (1162), Acura (265), Audi (170), BMW (584), Cadillac (284), Infiniti (260), Jaguar (183), Lincoln (69), Mercedes (579) Q10: Still thinking of [Manufacturer], for each statement I read, please rate each manufacturer on a scale of 1 to 10. The nearer the score to 1, the more you agree the statement does not describe the manufacturer. The nearer the score to 10, the more you agree the statement describes the manufacturer. Starting with [Manufacturer], how much do you think it is…? (score of 8-10) / :Significantly higher/lower than Jan-Mar 05 at 95% confidence level / :Significantly higher/lower than Lexus at 95% confidence level  : Lexus significantly leads all competitors

  9. Since this time last year, Lexus has made gains in most reputation measures such as right vehicle for me, reliable vehicles, and safety and continues to widen the gap on reliable vehicles in particular Reputation Gap Change: Lexus vs. Leader (or Next Closest Competitor) Base: total aware of brand Lexus Gap vs. Leader Jan-Mar 05 Lexus Gap vs. Leader Jan-Mar 06 Gap Change Base: Total Aware of Brand –Lexus (1162), Acura (265), Audi (170), BMW (584), Cadillac (284), Infiniti (260), Jaguar (183), Lincoln (69), Mercedes (579) Q10: Still thinking of [Manufacturer], for each statement I read, please rate each manufacturer on a scale of 1 to 10. The nearer the score to 1, the more you agree the statement does not describe the manufacturer. The nearer the score to 10, the more you agree the statement describes the manufacturer. Starting with [Manufacturer], how much do you think it is…? (score of 8-10) / :Significantly higher/lower than leader/closest competitor at 95% confidence level

  10. Lexus’ personality remains strong and constant, defined by contemporary, progressive, inspired, and caring. In addition, Lexus performs significantly higher versus the competitive landscape on most attributes Personality: JAN-MAR 06 Base: total aware of brand Base: Total Aware of Brand –Lexus (1162), Acura (265), Audi (170), BMW (584), Cadillac (284), Infiniti (260), Jaguar (183), Lincoln (69), Mercedes (579) Q8: Still thinking of [Manufacturer], which of the following characteristics strongly apply. Which luxury vehicle manufacturer, if any, would you say is [1st statement]? /: Significantly higher/lower than Jan-Mar 2005 at 95% confidence level /:Significantly higher/lower than Lexus at 95% confidence level : Lexus significantly leads all competitors

  11. Lexus has made gains in most strategic attributes versus the leader. Lexus continues to narrow the gap with the leader in exciting and continues to lead the next closest competitor in caring, progressive, and contemporary Personality Gap Change: Lexus vs. Leader (or Next Closest Competitor) Base: total aware of brand Lexus Gap vs. Leader Jan-Mar 05 Lexus Gap vs. Leader Jan-Mar 06 Gap Change Base: Total Aware of Brand –Lexus (1162), Acura (265), Audi (170), BMW (584), Cadillac (284), Infiniti (260), Jaguar (183), Lincoln (69), Mercedes (579) Q8: Still thinking of [Manufacturer], which of the following characteristics strongly apply. Which luxury vehicle manufacturer, if any, would you say is [1st statement]? / :Significantly higher/lower than leader/closest competitor at 95% confidence level

  12. Over time, Lexus has steadily increased as the only brand for consideration Top Box Consideration – “Only Brand I’d Consider” 12-week Rolling Averages Base: total aware of brand Date represents start of 12 week rolling period Q4 Please tell me how strongly you would consider purchasing or leasing each of the following manufacturers. I’m going to read several statements to you, when I have finished please give me the number corresponding to the statement that best describes your impression.

  13. Over time, perceptions of Lexus for performance and innovation have increased slightly Dashboard Metrics – Lexus Core Image Attributes Lexus Core Image Attributes (Q3 02 – Q1 06) Base: Total Respondents Asked Pollen Exceptional Quality Luxurious Prestigious High Perf. Innovation Q10: Still thinking of [Manufacturer], for each statement I read, please rate each manufacturer on a scale of 1 to 10. The nearer the score to 1, the more you agree the statement does not describe the manufacturer. The nearer the score to 10, the more you agree the statement describes the manufacturer. Starting with [Manufacturer], how much do you think it is…? (score of 8-10)) Q8: Still thinking of [Manufacturer], which of the following characteristics strongly apply. Which luxury vehicle manufacturer, if any, would you say is [1st statement]? /:Significantly higher/lower than Q302 at 95% confidence level

  14. Summary: What is Lexus’ Status Among Luxury Vehicle Intenders? Lexus continues to hold its leadership position in the luxury vehicle category, while seeing gains in innovation and performance over time • Lexus leads all competitors in terms of total consideration, and all competitors in ad awareness • Brand reputation is centered around strengths in QDR, and Lexus dominates in reliable vehicles. Lexus now leads BMW on “right vehicle for me” • Lexus’ personality is defined as contemporary, progressive, inspired and caring, and runs neck-to-neck with BMW for stylish • There’s further evidence that Lexus is developing a higher and more dynamic profile – and is increasingly seen as luxurious, stylish, and inspired • There has been a steady increase over time in those who see Lexus as the “only brand I’d consider”

  15. Collision 3 3 Did Collision Break Through and Communicate to Strategy?

  16. Overall… Collision softly communicated on strategy its intended message of luxury and performance capabilities of the RX 400h hybrid vehicle However, the ad was highly distinctive and engaging, while making its point in a creative way

  17. Collision Ad Strategy Primary Communication: Communicate that the RX 400h is a hybrid vehicle that offers both luxury and performance.

  18. Despite average levels for recognition and linkage, Collision’s efficiency score was lower than the Lexus average Recognition & Linkage Base: Total Exposed To Advertising 35% incorrectly linked brand 9% Unsure Branded Recognition Recognition Linkage Efficiency Lombard Street Average Recognition: 32% Average Efficiency: 12.6 Average Linkage: 52% Average Branded Recognition: 17% Recognition Base: Total exposed to ad: Collision (404) Brand Linkage Base: Collision (117) QAD1a Do you remember seeing this television ad before today? QAD1b: What automotive manufacturer do you think this ad is for?

  19. Collision was seen as standing out and appealing – with salience scores significantly higher versus the average, and involvement scores directionally higher than both Lexus and competitive averages Ad Response (Salience, Involvement and Persuasion) Base: Total recognizers Ad Salience Ad Involvement Ad Persuasion Makes me a lot more interested in getting a Lexus Really stands out from other ads Very appealing    Makes me a little more interested in getting a Lexus Somewhat stands out from other ads More appealing than other ads    /Significantly higher/lower than Collision at 95% confidence Total Ad Recognizers: Collision (117); Lexus TV Average (122); Competitive Average(115) QAD1e: Which of these statements best describes how different you find the advertising? QAD1d: Which of these statements best describes how appealing you find the advertising? QAD1f: Thinking of this ad, which of the following statements best applies to the advertising?

  20. Approximately 2 in 3 felt the ad was clever, which further demonstrates why the spot is seen as standing out and interesting. Collision also made respondents want to learn and find out more – directionally higher than the averages, but not necessarily more interested than the average on actual purchase intent Ad Diagnostics Base: Total recognizers /Significantly higher/lower than Collision at 95% confidence Total Ad Recognizers: Collision (117); Lexus TV Average (122); Competitive Average(115) QAD1g: And which of these statements do you think go with this advertising?

  21. 1 in 4 recognizers took away the primary intended message of the RX 400h being a hybrid vehicle that offers both luxury and performance Message Communication Base: Total Recognizers Total Ad Recognizers: Collision (117) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  22. Many recognizers also saw Collision delivering an overall message about Lexus such as being reliable, high performance, and sporty Message Communication Base: Total Recognizers Total Ad Recognizers: Collision(117) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  23. Summary Collision resonated with consumers, connecting with them primarily through its distinctive creative idea • The “clever” creative idea stood out for consumers • Executionally, the spot stood out for many, and for some it “makes me want to find out more” information. However, actual interest in “buying” a Lexus was on par with the average • Though the spot was salient and managed to catch people’s attention, overall communication take-away was soft • The spot ultimately communicated to 1 in 4 recognizers an overall message of both performance and luxury of the hybrid vehicle • The majority took away the overall brand message of reliability, high performance, and appearance • Overall, the creative idea was very distinctive; however, the ad communicates the strategic intent primarily through the voice over

  24. Online 6 3 Did Online Break Through and Communicate to Strategy?

  25. Overall… Online was widely recognized with above average efficiency. The ad performed well and on strategy delivering the intended message of a Lexus being the ultimate holiday gift and of the Lexus sales event The ad resonated among those who saw it as most knew it was from Lexus and felt it made its point in a “clever” way

  26. Online Ad Strategy Primary Communication: Communicate that Lexus is having a sales event. Secondary Communication: Communicate that a Lexus is the ultimate holiday gift.

  27. Recognition for Online was nearly double the average. Linkage levels are also very high, with Branded recognition three times the average. Online was also highly efficient Recognition & Linkage Base: Total Exposed To Advertising 14% incorrectly linked brand 6% Unsure Branded Recognition Linkage Efficiency Recognition Online Average Efficiency: 12.6 Average Recognition: 32% Average Linkage: 52% Average Branded Recognition: 17% Recognition Base: Total exposed to ad: Online (273) Brand Linkage Base: Online (168) QAD1a Do you remember seeing this television ad before today? QAD1b: What automotive manufacturer do you think this ad is for?

  28. Salience for Online is slightly higher than the Lexus and competitive averages, while appeal is significantly higher than the competitive average. Persuasion is slightly below the TV and competitive averages but on par with the DSE average Ad Response (Salience, Involvement and Persuasion) Base: Total recognizers Ad Salience Ad Involvement Ad Persuasion Makes me a lot more interested in getting a Lexus Really stands out from other ads Very appealing    Makes me a little more interested in getting a Lexus Somewhat stands out from other ads More appealing than other ads    /Significantly higher/lower than Online at 95% confidence Total Ad Recognizers: Online (168); Lexus TV Average (122); Competitive Average(115) QAD1e: Which of these statements best describes how different you find the advertising? QAD1d: Which of these statements best describes how appealing you find the advertising? QAD1f: Thinking of this ad, which of the following statements best applies to the advertising?

  29. Online was also seen as making its point in a clever way – significantly higher versus the Lexus and competitive averages. The spot was also believable and easily understood Ad Diagnostics Base: Total recognizers /Significantly higher/lower than Online at 95% confidence Total Ad Recognizers: Online (168); Lexus TV Average (122); Competitive Average(115) QAD1g: And which of these statements do you think go with this advertising?

  30. 2 in 3 took away that a Lexus is the ultimate holiday gift. While only 1 in 6 took away that Lexus is having a sales event, this is the highest level we have seen for Lexus sales event ads Message Communication Base: Total Recognizers Total Ad Recognizers: Online(168) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  31. Many took away overall brand messaging communication such as exciting, aspirational, and luxurious Message Communication Base: Total Recognizers Total Ad Recognizers: Online (68) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  32. Summary Online was a highly efficient ad and appealing to those who recalled it • 2 in 3 luxury intenders recognized the spot which translated into a high efficiency score for the ad • The spot was extremely well branded to Lexus • The spot was impactful for those who recalled it • It was also seen as clever and believable • Online communicated its desired message of ultimate holiday gift to 2 out of 3 recognizers. Only 1 in 6 took away that Lexus was having a sales event, however, this is the highest we have seen for any Lexus sales event ad, and is on par with other luxury vehicle sales event ads tracked by H&P • The spot is on par with generating interest in wanting to find out more and in terms of purchase intent

  33. Lamppost 6 3 Did Lamppost Break Through and Communicate to Strategy?

  34. Overall… Lamppost was also highly efficient, widely recognized, and extremely well branded. The ad performed well and on strategy, delivering the intended secondary message of the ultimate gift idea Lamppost resonated among those who saw it as most felt it made its point in a clever way, though few were persuaded to find out more

  35. Lamppost Ad Strategy Primary Communication: Communicate that Lexus is having a sales event. Secondary Communication: Communicate that a Lexus is the ultimate holiday gift.

  36. The recognition level for Lamppost is nearly double the average, and the spot is also well branded. Efficiency score for Lamppost is also almost double the average Recognition & Linkage Base: Total Exposed To Advertising 17% incorrectly linked brand 4% Unsure Branded Recognition Linkage Efficiency Recognition Lamppost Average Efficiency: 12.6 Average Recognition: 32% Average Linkage: 52% Average Branded Recognition: 17% DSE average: 16.0 66% 64% 42% Recognition Base: Total exposed to ad: Lamppost (273) Brand Linkage Base: Lamppost (157) QAD1a Do you remember seeing this television ad before today? QAD1b: What automotive manufacturer do you think this ad is for?

  37. Salience, Involvement and Persuasion for Lamppost are on par with the Lexus and competitive averages Ad Response (Salience, Involvement and Persuasion) Base: Total recognizers Ad Salience Ad Involvement Ad Persuasion Makes me a lot more interested in getting a Lexus Really stands out from other ads Very appealing    Makes me a little more interested in getting a Lexus Somewhat stands out from other ads More appealing than other ads    /Significantly higher/lower than Lamppost at 95% confidence Total Ad Recognizers: Lamppost (157); Lexus TV Average (122); Competitive Average(115) QAD1e: Which of these statements best describes how different you find the advertising? QAD1d: Which of these statements best describes how appealing you find the advertising? QAD1f: Thinking of this ad, which of the following statements best applies to the advertising?

  38. Lamppost was seen as making its point in a clever way with a relevant message – both directionally higher versus the Lexus and competitive averages, though the spot persuaded few to want to learn/find out more Ad Diagnostics Base: Total recognizers /Significantly higher/lower than Lamppost at 95% confidence Total Ad Recognizers: Lamppost (157); Lexus TV Average (122); Competitive Average(115) QAD1g: And which of these statements do you think go with this advertising?

  39. Approximately half took away that a Lexus is the ultimate holiday gift, while few took away that Lexus is having a sales event Message Communication Base: Total Recognizers Total Ad Recognizers: Lamppost (157) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  40. The majority saw the ad delivering an overall message about aspiration or luxury Message Communication Base: Total Recognizers Total Ad Recognizers: Lamppost (157) QAD1c: What do you feel was the main message of this ad? What do you think this ad communicates? What impressions does the ad give you about [the brand]?

  41. Summary Lamppost was highly efficient and made its point in a “clever” way • Nearly three in five luxury intenders recognized the spot and ad efficiency was nearly double the average • The spot was extremely well branded to Lexus • Response to the advertising execution was on average for most measures • It was seen as clever • Lamppost communicated its desired message of being the ultimate holiday gift to 1 out of 2 recognizers, however the primary communication of sales event was low as is typical of most luxury vehicle sales event ads tracked by H&P • Though the ad is on par in terms of purchase intent, the spot generates low interest in wanting to find out more

  42. Overall, 71% of Luxury Intenders have seen at least one ad in the DSE campaign, with nearly half seeing both ads Campaign Recognition Base: Total Exposed to Advertising Seen at least one ad in the campaign: 71% Base: Total exposed to all 2 ads in the campaign (273) QAD1a Do you remember seeing this ad before today?

  43. 2005 DSE advertising is among the most distinctive, appealing, and persuasive of all DSE ads tracked since 2002 DECEMBER SALES EVENTS – ADVERTISING RESPONSE OVER TIME cd cd cd cd c QAD1e/d/f:Which of these statements best describes how different you find the advertising?/Which of these statements best describes how appealing you find the advertising?/ Thinking of this ad, which of the following statements best applies to the advertising? Base: Ad recognizers; Surprise (185); 2003 DSE (277); Living Room (189); Tangled (131); Lampost (157); Online (168) abcdef: Significantly higher at 95%+ vs. column

  44. Recognizers find Online to be on par with the 2002 and 2003 DSE ads for credibility and ability to relate to the attitude, while Lampost is on par with the highest DSE scores for relevant and meaningful. DECEMBER SALES EVENTS – ADVERTISING RESPONSE OVER TIME cd cd cd c c c f cd cde c cd ef cd cd QAD1g: For each advertisement, please select all statements that you feel apply. Base: Ad recognizers; Surprise (185); 2003 DSE (277); Living Room (189); Tangled (131); Lampost (157); Online (168) : Significantly higher/lower at 95%+ vs. Lexus TV Average *: Significantly different at 95%+ vs. Lexus Sales Event Average

  45. Points For Discussion 4

  46. Points For Discussion • The Lexus brand continues to be a strong player in this luxury category. Lexus has strengthened its core values while holding on to some of its gains in terms of style, luxury, and inspired. Over time, Lexus has done a nice job at moving the needle with innovation and to a lesser degree, performance • The sales event advertising is strong at communicating the secondary communication of a “holiday gift” among two year intenders without having a detrimental impact on the majority of the brand measures • However, we need to talk to one month or near-term intenders to determine whether “sales event” should be primary communication objective among this more narrow target 45 Hall & Partnersµ Brand and Communications Research

  47. Appendix: Dashboard Metrics & Demographics 5

  48. Dashboard Metrics – “Only Luxury Brand I’d Consider” Top Box Consideration Over Time (Jan 05 – Mar 06) Base: Total Respondents Asked Lexus BMW Mercedes Cadillac Acura Infiniti Q4: Please tell me how strongly you would consider purchasing or leasing each of the following manufacturers. I’m going to read several statements to you, when I have finished please give me the number corresponding to the statement that best describes your impression.

  49. Dashboard Metrics – Lexus Core Image Attributes Lexus Core Image Attributes (Jan 05 – Mar 06) Base: Total Respondents Asked Pollen Exceptional Quality Luxurious High Perf. Innovation Prestigious Q10: Still thinking of [Manufacturer], for each statement I read, please rate each manufacturer on a scale of 1 to 10. The nearer the score to 1, the more you agree the statement does not describe the manufacturer. The nearer the score to 10, the more you agree the statement describes the manufacturer. Starting with [Manufacturer], how much do you think it is…? (score of 7-10)) Q8: Still thinking of [Manufacturer], which of the following characteristics strongly apply. Which luxury vehicle manufacturer, if any, would you say is [1st statement]?

  50. Demographics Demographics Base: Total Respondents Age, Annual HH Income, Number of people in Household Base: Jan- Mar 2005 (1191), Jan- Mar 2006 (1195 Children under 18, Children not in household Base: Jan- Mar 2005(1129), Jan- Mar 2006 (1093) ab: Significantly different at 95%+ vs. column