Learning How to Speak to Gen Y

In just 18 months, the Scion team had to create its brand from scratch -- and avoid repeating the mistakes of the Genesis team. The focus this time would be on the cars, not the ads that consumers would see on television. To appeal to the U.S. market, the Scion team souped up the bB -- and then went further, renaming the vehicle the xB. A tiny hatchback version, called the xA, was added to the lineup, even though it was only a computer image at the time. Both cars came standard with high-tech stereo equipment that makes playing MP3s and tuning into satellite radio possible. The Scion team also wrangled a promise that they would get all-new vehicles every four years -- not just cars with subtle changes as annual upgrades.

By focusing on the cars and increasing their emotional appeal and flexibility, the Scion team overcame two problems that the Genesis team couldn't solve. But another big issue remained: Where would the cars be sold? Finding a way to differentiate Scion from Toyota was crucial. And adding new Scion dealerships -- the approach that Toyota had taken with Lexus -- wasn't in the budget. The carefully crafted solution? Create special sales centers within many of Toyota's existing dealerships, giving gen-Y consumers a culturally appropriate place to hang out, look up information on the Net, and browse without ever having to speak to a salesperson.

For a company that's aiming to topple GM, Scion's low sales expectations -- just 100,000 units by 2005 -- seem antithetical to fast growth. Add to that an intentionally slow rollout: So far, Scion cars are available only in California, giving the team a chance to make any necessary adjustments before rolling out more cars nationwide, an initiative scheduled for early 2004. For Toyota, and for the moment, Scion's biggest role has been to help the company learn how to change -- so that it will never again have to struggle to respond to big shifts in consumer demographics.

"One of the most important roles for Scion has been institutionalizing the idea of change at Toyota," says Jim Farley, Scion's vice president. "That kind of change can't stop with Scion. It has to help us evolve cars like Corolla and Camry as well, so that they can appeal to future consumers."

Sidebar: Beyond tattoos: new rules for Generation Y

For Scion, Toyota's newly launched brand in the United States, getting its products right was the first step in connecting with generation Y. But the next step also had to be done well: creating the brand image. While searching for the right ad agency for the job, the Scion team knew that it had to find a pitch that offered more than just tattooed models. The winner: Attik, a marketing group based in decidedly unhip north England. Rather than pitching piercings, Attik suggested new rules for winning a new generation. Here are three from Will Travis, president of Attik USA.

1. Keep the respect. "You need to care about their opinions. The young adults of generation Y are a lot more respectful than the generation that came before them. You can't make them feel small or treat them as if they don't know anything. And the worst thing you can do is act like something you're not. That's why Scion can't be treated like an illegitimate child. It has to be a part of the Toyota family."

2. Keep an array of options. "Don't choose actors or models who you think represent generation Y. Gen-Y consumers want to see an array of personalities. Variety is completely acceptable with them."

3. Keep it quiet. "It's true that gen-Y consumers like to discover brands on their own. That doesn't mean that they don't want to be marketed to. But it does have to be on their terms and in places where they hang out."