Toyota Motor Company is considering a complete redesign of its iconic economy car, the Prius. After 15 years in production, with only very subtle design changes as seen in the design evolution pictures below. It would be a big risk for Toyota to drastically change the proven design of the Prius, but it could also open it to a large new consumer base. Since its original debut in 1997, the Prius has epitomized the movement towards environmentally friendly hybrid vehicles that run on both gasoline and electricity. The Prius has experienced record sales in 2012, with sales increasing 60 percent over last year. The main driving factor for the possible shift to a new design is to move away from the awkward shell type platform that has reigned since its initial debut. Although the shell is an incredibly aerodynamic style, it has traditionally been seen as something of a “geek mobile” and was often ostracized by most car enthusiasts. By shifting to a more generally appreciated design, Toyota would see its target market grow substantially, since most car buyers are always looking for the best mix of fuel economy and design appeal.
It is slightly surprising that Toyota is considering such a drastic redesign, since it is currently in the growth stage of the product life cycle. As stated in class, the growth stage is when a manufacturer needs to focus on competitive product improvements, which are needed to help it stay current with the recent introduction of new competitors such as Ford, and the continuing rivalry with Honda. However, Toyota Prius has managed to follow one characteristic of the product life cycle, and that is to enhance distribution and capacity. It has managed to increase capacity from only a few thousand units in its initial introduction, to nearly 700,000 through only the first 9 months of this year. By designing a new generation of Prius to appeal to more style conscious consumers, Toyota may end up gouging its current market, since many of the current buyers appreciate the iconic shell shape. At this point it is impossible to predict the exact fate of the Prius, since the new design has yet to be finalized. However the question arises of what possible design attributes can Toyota maintain from the current model to retain current customers, and what can they change to help attract new buyers?
In a time when pennies count, retailers are looking for any competitive advantage they can find. One way which is starting to make a comeback is the layaway program. By allowing customers the opportunity to put items on hold for a set number of weeks, it gives the consumer who may not be able to afford a purchase right now the opportunity to lock in their price. These programs have several different structures, some charge upfront fees at the beginning of the layaway period, and additionally some of which accrue interest charges.
This philosophy is nothing new in the retail world, but has seen a renaissance over the past few years, with many large retailers such as Sears, Kmart, and Toys ‘R Us pushing the programs. By offering layaway, retailers hope to boost early sales and beat their forecasts for the holiday season. Layaway does, however, have its downsides for companies since many have waived their service fees if consumers do not follow through with their purchase. This leaves merchandisers holding onto the extra inventory. Also with this new push to increase sales, retailers are adding many new items eligible for layaway. This move could prove to be both a positive and a negative. While on one hand it will bring in more shoppers to put things on layaway. If enough consumers do not follow through on their contracts and the stores took precious items off the sales floor, the results could prove costly.
By offering layaway financing through the stores themselves, it gives consumers who do not have, or might not want to use their credit cards. By allowing these consumers who might not have purchased the item otherwise to purchase from your company, it opens your profit potential that much more. Because it entails more planning on behalf of the merchandising crew, and all of the other aspects listed above, the decision on whether the layaway program is beneficial to each individual company is something that is up for debate.
Question: If you had a retail company, do you believe implementing a layaway program would be a good idea? What are some other benefits and consequences in addition to the ones mentioned that might come about due to a layaway program?