How people buy cars (Pt I)

Roderick White Admap February 2004, Issue 447

Title: Author(s): Source: Issue:

How people buy cars (Pt I) Roderick White Admap February 2004, Issue 447

How people buy cars (Pt 1)

Roderick White Admap Also see the second half of this article: How people buy cars (Pt 2) , Roderick White, Admap, March 2004 ______________

This article concentrates on new cars: the second-hand market is much larger, in volume terms, and has rather different, somewhat less well-researched, characteristics A new car is the second most expensive thing most people ever buy, after a house. Like a house, you do it relatively rarely, and the process is threatening, fraught and takes time. Understanding how this works helps car marketers tailor communications to the individual's stage in the process either directly, where a sophisticated customer database is available, or, more crudely, by ensuring that appropriate communications to support each stage are widely available in the marketplace. Market characteristics The car market is huge and complex a recent US article talked of 2,500 models, and leading websites list 47 marques; while in Western Europe, there are over 50 marques, roughly 2,000 different models (plus innumerable variants), and an everwidening range of segments is recognised by the industry. Prices range widely: a high-spec luxury executive saloon may cost more than ten times the price of a basic small car and that is without considering rarified 'supercars'. Classically, this is a high-involvement, high-information market, in which people are expected and willing to go through extensive searches and researches, and look for all kinds of help. At the same time, cars are highly symbolic artefacts. The marque and model you drive say a great deal about you both to others and to yourself. It is never, therefore, a purely rational, functionally based purchase. (Indeed, even if you claim, like at least a quarter of Britons, that 'a car is merely a form of transport, to get me from A to B', this itself is a signal that may or may not actually be reflected in your choice.) This is true even where cars are provided for employees by their companies a practice in gradual decline in most countries. (In the UK, either the employee gets a free choice within fixed price guidelines or,
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in large organisations, must choose from a limited range made available through fleet purchasing. Either way, 'car park appeal' comes strongly into play.) A car purchase, then, combines a welter of elements, both rational and emotional, and is subject to a variety of influences. These may derive from income and resources, status, social norms, fashions, peer pressures, family pressures, personal values, self-image quite apart from any detailed consideration of what a vehicle is required for, and how it will be used. (How else can one explain the 4x4s and SUVs that never go beyond suburban shopping centres?) The buying process While the interval between new cars varies widely, many owners, especially those driving company cars, change them regularly: the company-car cycle is normally three years, but private owners rarely buy this frequently, and the older the owner, the more likely the car is to have been owned for a lengthy period. However, the high-profile nature of cars is such that the between-purchase period is not entirely fallow, as far as being open to influences on the next purchase is concerned. The extent to which cars are covered by the media, talked about between friends and colleagues and in bars, and are subject to regular attention due to servicing and repairs keeps awareness of cars your own or other people's high. Although this can be simplified, you can divide the buying process into 11 phases (see exhibit 1), in a continuous cycle, starting with the purchase of the current car. This multi-phase process can be analysed in considerable detail, and consideration of the car-owner/buyer's mindset at each phase indicates the sort of communications and marketing programmes that can best be used by the manufacturer (and/or dealer) to try to reach and influence the next purchase. It should be recognised, however, that this is a 'rational', logical schema. Not everyone follows it: some stages may be skipped, skimped or ignored. By no means everyone has the interest, time or savoir-faire to follow the guidance of motoring organisations or consumer associations on 'how to buy a car'. Marque or model? It should be remembered, too, that, because both models and drivers' requirements and family circumstances change over time, it is relatively rare for the same model to be bought as a replacement for the previous car. This means that manufacturers are generally rather more interested in building marque brand loyalties among their existing customers than model loyalties. This is true even though individual model brands Ford Fiesta, BMW 3 series, Honda Civic may be revised, re-vamped and relaunched over a lengthy period. This allows for a continuity of brand image being developed among the wider market, in the interest of achieving conquest sales. The problem facing car manufacturers is shown by worldwide marque loyalty levels, from purchase to purchase, averaging below 50%, and tending to decline over time, as the overall quality of cars has risen, so that old clear distinctions between marques, based on build, performance or reliability, are disappearing. The considerations that may affect car owners as they move towards their next purchase are detailed below. In general, the first four phases are those in which the current marque aims to build a relationship with the owner and to engender loyalty. It is

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only at stage five that, assuming a satisfactory experience, other marques begin to be seriously considered though they can lay the groundwork for consideration; and if they have failed to do so, it will be more difficult to get in to the consideration set for the next purchase. The active phase of buying a car, from stage five onwards, averages 16 weeks in the US, with women taking slightly longer than men. Some of the ways in which manufacturers (or dealers) may best expect to influence consumers through this long-drawn-out process are listed in Table 1.Asisclear,theoptionsareconsiderableandcomplexatmoststages,andthebalanceusedwill depend on everything from the size of the budget to the quality of the company's database. At stages 13 and 1011, the main (or perhaps only) influence will be from the owned/bought marque. The use of direct mail in stages 12, especially, is likely to be various forms of 'welcome'. Competitive influences can really start to come into play about stage 4. Buying considerations Auto buyers take into account a wide range of factors in choosing a new vehicle. The process can be seen as a 'funnel', into which a number of models are fed at the start, and only one car emerges at the bottom. A typical short-list is rarely more than three or four models, out of a consideration set that may be as many as a dozen. Broadly, buyers' considerations can be divided into two categories: rational and emotional. The Pan-European New Car Buyer Survey (NCBS) provides very detailed analyses, primarily of the rational factors, which show clearly that their importance varies both by market segment and by marque/model, and to some extent from country to country. The exhibits 2 and 3, list the main elements in each category, which serves to show the potential complexity of decisions in this market. From the NCBS, it is very clear that while the considerations remain common across the whole market, they vary quite widely between segments, and between groups of buyers. As a simple example, pensioners tend to buy low-cost cars from marques with reputations for reliability. Well-off singles may buy, on almost an impulse basis, a set of sporty wheels to show off and be seen in. In practice, people manage to prioritise among these various features either consciously or unconsciously and while they mostly set out to be rational, emotional factors tend to act as the 'tie-breakers' at the end of the process; and also as 'gatekeepers' early on, when marque image and reputation is often a key factor in whether or not a car enters the consideration set. As cars have become more 'equal' in physical terms, emotional factors, which have never been absent from the decision, become more important. THE BUYING PROCESS Characteristics of each phase 1. Post-purchase
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This is (hopefully) a period of euphoria, when you admire, enjoy, and boast about the new vehicle; and when you find out whether the car or dealer really lives up to the sales pitch. You enthusiastically justify your purchase to friends and colleagues,andyounoticeyourownmodelontheroadwhenyoumeetone.Disasters,iftheyoccur,hurt.

2. Fallow period non-interest

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Other models are only thought about if things go badly wrong. This is a period when the owner can hopefully bond with the new car. But you still talk to your friends about cars and watch the TV, so you are exposed to some outside messages aboutcars,thoughyoumayignorepressads.

3. Fallowperiod'I'llneedareplacementsometime'
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May be triggered by an expensive repair or simply a desire for change, or the simple fact that regular change is an employer'spolicy.Youstarttonoticeothermarques/modelsontheroadmorecarefully.

4. Firstthoughts'I'llneedanewcarquitesoon'
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Requirements for the next car begin to surface. Interest in cars starts to heighten. You may watch TV car programmes, lookaroundontheroadandinthecarparkreadtheoddcarreview,orevenapressad.

5. Initialsearchseriouslookingabout
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Fairly unfocused searching, talking to friends, perhaps looking at car magazines. Choice criteria begin to be formed. You becomefarmore'carconscious'.Aconsiderationsetbeginstoemerge.

6. Getting seriously active developing the short-list

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Serious searching, using a variety of sources, which may include online or offline car comparisons and ratings. Choice criteria are developed and refined (price and size/format are usually the basics). Both the internet and car magazines prove their worth. Consideration set firms up.

7. Detailedinvestigation
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Criteria used to eliminate non-starters. More detailed opinions sought from any likely source. Increasingly the web, usually car comparison sites, is a key element here. Your eye may be caught by a new model or a good deal. (Short-lists typicallythreetofourmodelsonly).

8. Shoppingaround
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Let's go see some cars I'll check the Yellow Pages (ortheweb)fordealers Howdoestheshowroomlook? CanIfindandbrowseinformation? CanIrelatetothissalesperson? Dotheyhaveanyinterestingdeals? Let'shaveagoodlookatthecarwhatdoesthefamilythink? CanIsetupatestdrive?DotheygivemefreedomtodowhatIwant,notwhatthesalespersontellsme? I'mstillinterestedinthose,let'slookmorecloselyatprices:here'swheretheweb'sabonus.
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(forsome)CanIspecifypreciselywhatIwant,online?

9. Negotiationandpayment
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HowdoIwanttopayforit? Can I get a good trade-indeal? CanIgetabetterdealdowntheroad?Offtheweb?Abroad? WhatifIaddon/takeoffthis(extra)? DoIgetitquickerinadifferentcolour? Whatdidyousaythedeliverydatewas? Anythingoffforcash? Iunderstandthisleasingscheme?DoIreallywantit?Whatdoesitreallycost? Mybankwillonlyloanme$X,000

10. Waitingfordelivery
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IwonderifIamreallyright Whatwillmyfriends/neighboursthink? Howmuchlonger? IsthatreallyacolourIcanlivewith? Allthatmoney Theysaiditwouldbethreeweeks,anditisfouralready

11. Delivery
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Oh,wow!(or,perhaps)OhmyGod! ThankyouMrDealer Ihopeyouarenotexpectingmetoacceptthis Let'sgetinsideandtakethefamilyforaspin I can't wait to show the neighbours.

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NOTES & EXHIBITS

Roderick White
Roderick White is editor of Admap. He has many years' experience in ad agencies, and has worked on both the Ford and Alfa Romeo accounts. roderick_white@warc.com

EXHIBIT 1

TABLE 1: SCHEMATIC VIEW OF COMMUNICATION INFLUENCES BY BUY STAGE

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EXHIBIT 2

EXHIBIT 3

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