Question 1: Why are Japanese automakers targeting Gen Y?

Answer:The strategy behind Asian automakers targeting Gen Y as well as other industries is because Gen Y have become relevant consumers in the market place. Also known as Millennials, the Generation Y are comprised of 56 million people, according to the 2010 Census and it is considered the second largest age group behind Baby Boomers. Born between 1946 and 1964 the Baby Boom generation has long been the primary target group that product developers. However, the Baby Boomers are an aging demographic and their financial priorities are shifting, while Millennials sheer numbers alone were appealing. Even knowing Millennials have household incomes below $50,000 (Nickell, 2012) the country's post-war prosperity gave them tremendous buying power, making the growing focus on the Millennials as the next consumer target for many companies’ especially Asian automakers.

Question 2: Do you think Honda & Toyota are using the right strategy by creating new vehicles such as the Element & the Scion?

Answer: Both companies are trying to hit a key demographic generation, by differentiating their products with new vehicles such as the Element and the Scion that it does not reach with the others vehicle's platform. Through innovation, these new vehicles were created as a potentially rewarding product strategy for reaching Generation Y. Toyota brand for instance in the early years of the 21st century, was perceived as old-fashioned and was failing to appeal to the country’s youth. In 2002, Toyota launched Scion, a new sub-brand targeted at Millenials. Aware of the Millenial’s characteristics Toyota Scion offered customers a choice of three standardized models, with a large number of optional accessories giving the youth an opportunity to customize their car digitally. Each model was competitively priced below $20,000. Toyota was prepare to sacrificed margins on the
Vehicle in order to profit from accessory sales, whilst simultaneously hoping to establish a relationship and brand loyalty with young buyers. Honda also believes that by creating a relationship with young buyers can improve the brand name. Honda’s strategy recognizes the different preferences among the generation Y and has aimed at putting them in new vehicles such as the Element in order to reach them. Even though they stop production of this model in 2011, it is expected that a new model will be introduced to maintain in touch with the generation Y.