Trips to local car dealers, conversations with friends and family, reading up on Car and Driver and Consumer Reports – these were the traditional ways of deciding what new car to buy. But based on recent studies, new car buyers are focusing more on online communities, made-for-YouTube advertisements, and “build-a-car” features on manufacturer websites to decide what to buy.
Changing consumer habits, especially with regards to technology and its usage, are having major implications for businesses of all kinds. While the majority of the news reported regarding these implications is reported in relation to more high-tech industries, there are profound changes happening in the more traditional products and services industries as well that are not as widely reported. And a great example of this is the automotive industry, which has changed the way it markets itself with the increasing use of technology among its target audience.
Having worked in the automotive industry in a marketing capacity for more than seven years, I have seen these changes first-hand as well as been a part of them, and they have been fascinating to say the least. According to an insight paper by McKinsey & Company, automotive companies were surprisingly among the first to use online media as a platform for car sales, with automobile configurators becoming a popular feature on their websites early on. But the majority of them have not kept up with consumer habits in recent years and very few have added any other eMarketing features apart from refined versions of online configurators.
Brabus Online Configurator
The McKinesy report also talks about eight key trends shaping digital marketing in the automotive industry, such as digital experience counting as the second most important consumer touchpoint after live experience in determining consumers’ willingness to pay. Other trends are digital media becoming an important part of the “purchasing journey” for consumers, the positive corollary between integrating online and offline marketing campaigns to consumer brand perceptions, and digital products enhancing brand loyalty (hence the move to integrate new technologies such as mobile devices to car music systems based on online feedback).
In addition, the report talks about how digital communities are influencing purchase decisions, with many traditional purchase influencers such as Car and Driver and Consumer Reports magazines moving forums online and becoming major platforms of community discussion. Having been part of the industry, I can relate to a lot of these points, especially the ones related to consumers forming perceptions of brands from online marketing and community forums in particular. Even so, many manufacturers, especially the larger and older brands, still spend the majority of their advertising budgets on traditional marketing areas such as print and television advertising.
A major reason for this slow response to adapting all forms of digital media is the way many manufacturers are managed. Many of the traditional brands have senior management that has been brought up in the traditional school of automotive marketing thought that undervalues the impact of digital marketing. For example, one major argument that manufacturers give for not embracing electronic marketing wholeheartedly is that the majority of digital media influenced car sales are in the secondary, or used, car market, and not in the primary market for new users where test drives are preferred in the purchasing process. While this is true, it should also be noted that test drives come towards the end of the purchasing decision, whereas electronic marketing is a major facilitator in the first two steps of the decision process, namely awareness and consideration.
Another point that automotive executives should keep in mind is that the preferred target market, namely young adults who may become brand advocates for the rest of their lives if marketed to strategically, is a heavy user of digital media in their decision making processes. This brings me to an interesting article published just this week on CDK Digital Marketing’s website. CDK is an influential automotive digital media agency and hence a major proponent of electronic marketing for the industry as a whole.
The article starts off with a J.D. Power study stating that Gen Y buyers have increased in market share at the greatest rate among new-car buyers, and then mentioning a Deloitte study showing that 65% of Gen Y buyers would also prefer to buy a car without negotiating with a salesperson. This information opens up great opportunities, and the author goes on to describe in detail a program run by General Motors called Shop Click Drive that has managed to take advantage of this young demographic’s preference for online shopping. The Shop Click Drive program is a recent marketing tool that allows consumers to go through all the steps in the purchasing process online in conjunction with a local dealer, so that the only interactions that take place between the consumer and the dealer are the test-drive and the actual handing over of the vehicle. The program started out with a few dealers in Michigan, General Motors’ home, and has now been rolled out across the United States.
The implications of these new trends in automotive consumer habits are obviously going to have major changes in the way automotive manufacturers market their products. A few companies, such as General Motors, have already managed to tap in to these trends to create digital marketing tools to increase their revenues. And more so than other businesses, the automotive industry with its big purchase items, will need to seriously consider ways to influence consumers in an increasingly competitive market if they are not to be left behind.
Articles
McKinsey & Company: “Eight trends shaping digital marketing in the auto industry”
http://www.mckinsey.com/client_service/marketing_and_sales/latest_thinking/eight_trends_shaping_digital_marketing_in_the_auto_industry
Jillian Overmyer, CDK Digital Marketing: “The Generation Y Approach to Car Buying: Revolutionary or Evolutionary?”
http://www.cobalt.com/blog/automotive-reputation-management/generation-y-approach-car-buying-revolutionary-evolutionary/