If you’re like most professionals, you’ve honed your craft over many years, learning with every new position and job. Wherever your career has taken you, there’s one common denominator – there are no two places that are the same. For those outside of the auto industry, that seems a bit unbelievable because every dealership and shop seems pretty much the same. Whether you’re in service or sales, new or pre-owned, Fords or Chryslers – it’s all tires, transmissions and transactions to the average consumer.
While every dealership or service center offers similar products and services, those of us on the inside know that every location is different. You know this as sure as every customer is different, yet the average consumer has great difficulty distinguishing one dealer or service center over another once they get past the vehicle makes you sell or services you offer. The OEMs invest heavily in brand differentiation, but it doesn’t help a dealer who is competing with another dealer pushing the same vehicle make. Service centers face an even tougher challenge as most don’t have the benefit of OEM marketing muscle or a huge advertising budget. Stop into just about any dealer lot or service center and you’ll find that 95% of the buying experience revolves around brand reliability/performance and price. After all, that’s all that consumers care about, right?
All the consumer research in the world isn’t wrong – price is king. Consumers have been fed nothing but a steady diet of the price proposition from the auto industry. Once we get past promoting our inventory of cars and trucks, we slip into an old comfortable pair of shoes – price promotions. It’s what we’ve been feeding consumers, and they’ve happily digested it, turning our own sales efforts against us and relegating us to simplistic purveyors of a commoditize product. Once the consumer knows they’re buying a Toyota Tacoma, they’ll use Sunday’s auto section or the internet to pit one Toyota dealer against another, using price and availability to squeeze every ounce of profitability out of the transaction. I don’t think anything that I’m writing here is some sort of revelation that explains why the modern consumer has so much leverage in shopping for vehicles or repair services. The sad truth is that we’ve willingly done this to ourselves. So now what?
Unless you own a time machine, there’s nothing you can do about the past. Instead, move forward by taking advantage of the fact that so few organizations practice the true art of differentiation, and fewer still explore the full spectrum of what it takes to stand out in a noisy world. More importantly, as the cost of customer acquisition skyrockets and the emphasis on customer retention becomes the platform to secure profitability over the long haul, you’ll need to master differentiation in the modern age of marketing. This is a model I adapted from marketer E. Jerome McCarthy, who proposed a four Ps classification in 1960, which has since been used by marketers throughout the world. I’ve added two additional Ps to a modern version of 7 Ps called the “Marketing Mix” that is referenced often by the American Marketing Association (AMA). To summarize, with effective differentiation, an organization elevates its stature in the consumer’s perception, thus yielding better margins for a more comprehensive offering that extends beyond price and product. You’ll see this tactic used everywhere in modern marketing and advertising. Is Snickers selling chocolate and peanuts for a dollar or is it combating dysfunctional social behavior caused by hunger? For benefits like that, price is irrelevant.
Let’s explore the 9 P’s that make up product differentiation in the modern age of marketing. Along with the definitions, I’ve also added a narrative to how each might be addressed as a service center or auto dealership.
- Price: Price is what you charge for products and services. If you lead with price as a differentiator, it leaves little room to negotiate your way to profitability unless you make it up in volume. Since it’s difficult in the automotive world to ignore price, use it as a means to secure loyalty over time ($99 for 4 oil changes) or to bundle a more complete solution to the consumer’s problem (includes labor, wheel balancing and new valve stem).
- Product: Product is what you sell, including services as a repair facility. It’s difficult to differentiate the vehicle or the service, but learn to wrap more into the product the consumer is buying (e.g. extra 5K in lease miles). Identify the list of associate product offerings that would take your team less than 5 minutes to complete as part of the purchase. It will go a long way towards differentiating the product. Also, add products or services that create “touch points.” You want to see the customer often in order to solidify relationships that will pay off when they ready for their next big purchase or repair.
- Placement: Placement is the location or channel where the consumer can purchase the product or service. You can wait for the consumer to find you or you can find linkages to the consumer through partnerships in your community (e.g. special offer for Uber drivers in your zip code). This tactic is about creating relevance for the prospect. Exclusive offers drive sales whether there is a savings or not.
- Promotion: Promotion is how you tell the market of your products and services. Beyond the medium (television, print or the internet), promotional differentiation can also translate into the gimmicks that make that promotion memorable. How will you stand out? You might be aware of a car dealer in Long Beach, CA named Cal Worthington, whose commercial featured his dog Spot, which was always some exotic animal, like a tiger or elephant rather than a dog. Memorable.
- People: People are the frontline of consumer interactions. It’s why you’ll never forget who your fourth grade teacher was or while you’ll never visit the restaurant where the manager was rude. It’s more than good or bad service. It’s the connection to whether the business transaction evolved into a personal interaction. Did it feel like a sales event or were your needs addressed like the valued customer who is in search of a trusted mechanic or car dealer?
- Process: Process is how you manufacture the product or service, typically identifying with a social responsibility bigger than the transaction itself? Do a percentage of your proceeds go to local charities? Do you offer auto repair financing to consumers who would otherwise not have access to credit? Do you appear to run a facility that promotes “green” initiatives? Social responsibility has become a real force in steering consumers to make specific buying decisions.
- Physical Evidence: Physical evidence is the evidence which shows that a service was performed, such as the new tires on a car or the number of miles on a new car. It can also be the proof that the service was poor or delivered without care (e.g. oil stains on the driver steering wheel). Whether positive or negative, this is the kind of stuff that ends up on a Facebook post. Take the extra step by providing the consumer the option of inspecting the used parts before replacement or having someone complete a new vehicle inspection before handing over the keys. Assume that consumers don’t trust you – the burden of proof is yours.
- Positioning: Positioning is how you want to be remembered for how you sell cars or repair vehicles. Too many dealers say they are “the low price leader” – again, don’t differentiate on price because you’ll be held accountable to drive prices right into the gutter. Instead, use regional landmarks or demographics to stake a claim on market opportunity (e.g. “Providing Toyota Trucks for Service Men and Women in the Fort Hood Area” or “We’ll do your brake job in 45 minutes or the next one is free”). It’s how the consumer will describe you – shape it.
- Packaging: Packaging is how the customer encounters your product or service while in the market for it. In the consumer retail world, product developers spend millions on packaging solutions. It matters to the consumer how the product appears on the shelf – and it should matter to you. What does your waiting room look like? Would you serve that coffee to your house guests? Do the magazines feature the 2004 Olympics? Do your service advisors have mismatching shirts with oil stains on them? Let’s not even talk about the bathroom facilities. The entire experience speaks to how you value the customer experience. Package it to match the perception you want your customers to have of your products and services.
In architecting your organizational DNA, you’ll now have more than your products and pricing to consider. While you don’t need to establish a fingerprint in all 9 areas, you’ll want to evaluate your standing in each and identify where the strengths and weaknesses are. You can also evaluate your competitors similarly in order to further drive a wedge between them and the consumer who wants to push you to match price offers. At the end of this exercise, you’ll be able to work with your marketing team to pull these attributes into your advertising messages and sales talk tracks. Again, it’s not about some seasonal promotion event or marketing campaign. Your organizational DNA needs to be lived out in every interaction, organically, completely and consistently. The consumer is now armed with access to social networks to expose your hypocrisy, which could damage your brand beyond immediate repair. Defining what you are to the market has more to do with your ability to execute on that vision than it does with your aspirations as a business. Consumers value reliability and authenticity just as much as price. Don’t overreach in your attempts to be all things to all people.
With proper differentiation, you should be able to answer the single most important question in the automotive industry, “Why buy here?” In a commoditized world of vehicle sales and service, you have no choice but to undo the decades of damage we’ve done through price promotion. All pricing being relatively equal, it’s time to help consumers evaluate another layer of attributes – the virtues of an organization that wants to win the business today and over the years to come.
About The Author: Sean Reyes is Vice President of Marketing for Confident Financial Solutions, the nation’s largest provider of auto repair financing. Sean’s experience spans more than 25 years of business development and strategic marketing experience, having worked in the automotive, healthcare, finance and technology industries to serve customers like American Express, Toshiba, Western Digital, Cox Communications, Gateway, Novartis, Microsoft, IBM, Compaq, HP, MyCustomerData, Toyota of Orange, and Fletcher Jones Mercedes Benz. While he has an accomplished portfolio of design, production and coding skills, his strength is in “go-to-market” business modeling and marketing strategies.
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