Article

Do You Have A Plan?

August 2006, Auto Dealer Today - WebXclusive

by Terran Lamp - Also by this author

Imagine you are the new General Manager of your dealership. You have the best cars in town, the lot is filled to capacity and your prices are unbeatable! Your sales people are thoroughly trained and your showroom is immaculate. The service staff is top notch and your dealership is located on prime real estate with sunny skies for miles.

Now, imagine you have got all these wonderful attractions and not one single consumer knows who you are. There is not a trace of a sale and no indication of profit. What could be the problem? Why does your dealership not have any business? Better yet, why is the dealer across the street with half the staff and a dusty old warehouse taking your sales away?

Could it be that you don’t have a plan? You have no goals and no way to track your progress. Not one person in the town even knows you exist other than by speeding by at 90 MPH. Your way of marketing and advertising is best described as a “Wing and a Prayer”.

Although your dealership may have everything physically in place, without a marketing and advertising plan things could quickly go in the wrong direction. First, let’s understand Marketing. Before the first car enters your lot you should have a marketing plan in place. Everyone in the dealership needs to know the product and its’ features and benefits. Your dealership must give the consumer a solid reason to purchase from you. Part of marketing is knowing your consumer. Who is you trying to reach? Who will buy your cars? Is your target market the price conscious consumer? Or the consumer who has money and is looking to make a luxury purchase? What about the competition? What are they doing to sell? How does your product compare? How are you different? Are your prices competitive? The competition in the automotive industry is tough; know what your competitors are doing. That means not necessarily to emulate it but know what you face in your market.

Marketing is about providing benefits to the changing needs of the end user. When you are putting together a marketing plan, start simple. Think of the 4 P’s: Product, Place, Promotion and Price (Philip Kotler, Principles of Marketing). What is your Product? In this case, it is an automobile, or the addition of a special finance option. Who is your target market? What makes your products different from the dealer across the street? Next Placement, how are you getting product to the consumer? A consumer walks into a showroom, are you ready to sell? If you incorrectly estimate demand, profitability will suffer. Dealers use an indirect distribution method, from the manufacturer to the dealer, to the consumer.

Price, how are you going to price your automobile? What are the terms for your special financing offers? Price is very critical to creating your plan because it has an effect on the other 3 P’s. Pricing strategies need to involve margins and the theory of supply and demand. Price can be adjusted according to a competitor’s response. It must involve the use of discounts, special financing and leasing options.

Promotion is the way you communicate the product and its benefits to the target consumer. Promotion involves advertising, creating a message and public relations. What is your strategy for getting the dealership in front of the consumer? Who cares if you’re the best if only you think so!

Finally, remember brand image is a key component to marketing. In the case of a dealership, you are the brand. You should be the first place the consumer thinks of when they want to buy. Create a brand image and stick to it! All of us know “Chevy, Like a Rock” and “Built Ford Tough,” so when consumers want to make a vehicle purchase, are you the first place they will go? Advertising and marketing is about creating long term relationships and building new business. It is about creating value and satisfaction in the minds of the consumer. Make a plan and stay with it!

Expanding the promotion section of your marketing plan? Let’s take a look at Advertising. Your dealership and your product must be in the minds of the consumer. Advertising involves communication using a form of mass media. It is taking the marketing plan you have created and putting it into action for the public. Advertising is creating your dealerships’ brand and making it come alive to reach the consumer. According to Ward’s Dealer Business, car and dealer advertising is the biggest category of ad sales in every form of paid consumer communications.

To develop your advertising plan; use an easy five step approach: Forecast, Budget, Planning, Execute and Evaluate. First Forecast your demand and your sales. Analyzing the plan from a financial angle will help avoid pitfalls that could send profitability on a downward spiral. It will also help you be in a better position to adjust to radical market shifts.

Second, Budget accordingly. Leedom and Associates of Sarasota, FL states that medium to large dealerships should budget $239/per retail unit sold (this amount is different from NADA data of $487 which is based on new cars sold). For example, if you sell 100 cars, $23,900 (239x100) should be budgeted for advertising.

Third, Planning, where do you want to be seen or heard? Advertising can take many forms. You should choose the method that is most effective for your dealership and your market. Although newspaper advertising is still the predominant source of ad dollars, that doesn’t mean it is the best for your dealership. The best media choice is the one that represents your target market. Whatever method you choose, be consistent. This means if you plan to do radio spots, be on the radio! Allocate your budget appropriately; remember, if you want to be heard on the radio, that’s where you need to focus your resources. Don’t put two ads in the paper, two on the television and two on the radio…focus on reaching your market. Consumers should be able to turn on the radio and know they are going to hear about you. Also be consistent with your message. Have a theme and stick to it! Your message and your brand must work together to promote your dealership. Consumers need to be confident in their purchase and in you. Clarity and consistency will develop your business and your product. Consumers will come to you for the quality and service they have come to expect.

Fourth, Execute your plan. Create your radio spots. Decide what stations you plan to air on (local or regional) and how many spots fit within your budget? What times relate to your intended audience? Are you going to have print ads in addition to the radio? Be careful not to spread your advertising dollars too thin and have too many different advertising venues, it is costly and it won’t send a consistent, clear message.

The final step is to Evaluate. Track the who, what, when and where’s of your advertising. Who heard your radio ad? Saw your Internet site? Or read the ad in the Sunday paper. Some dealerships actually conduct focus groups of buyers to find out how they heard about the dealer and the products. It is also a good idea to find out why they chose your dealership over others in the area. By tracking your advertising you can evaluate what is working and where you need to focus your efforts. Tracking will also allow you to eliminate ineffective advertising and marketing campaigns.

The decision on how to advertise can be a tough one. Your advertising should revolve around your brand image. The message you send about your dealership should tell consumers your values and why they should pick you. The Internet has changed the way consumers shop for automobiles so some dealerships are beginning to increase traffic by the use of Internet sponsors and related sites. A recent NADA survey found that 94 percent of new car and light truck dealerships have websites. Of these sites most of them allow consumers to view MSRP’s, fill out finance forms and schedule service appointments. Other dealers still want a more traditional approach of print and television. When creating your advertisements keep it simple. The overriding priority is a clear and consistent message. There does not need to be fancy graphics and buzzers to get the consumer’s attention. Tell them what they need to know.

Direct mail is still a popular method of reaching your target. With direct mail your dealership can send information offering special promotions and discounts to get consumers in the door. Dealership promotions can include giveaways, free gas cards or special financing offers. Your dealership may want to direct a campaign at all the new homeowners in the area. According to AutoListUSA, statistics show that 60 percent of new homeowners buy a new vehicle shortly after purchasing their home. Most importantly, none of these methods will be successful unless they are clear and concise. Create your brand, create your advertisement and stick to it! A confused consumer is a buyer lost!

The last item is to decide if you want to work with an agency or have an in house representative.

Tips to consider if you hire an agency (provided by InfoUSA):

Does the agency have automotive experience? Ask about past and current clients and request examples of sample campaigns.

Does the agency specialize in retail advertising? An agency that will help you sell cars should have retail experience. This is different from B2B or B2C brand-oriented advertising.

How does the agency handle possible conflicts of interest? Some agencies work with only automotive clients, while others in work with clients various other business.

How does the agency charge for services? Know if the agency charges an hourly rate or a set fee. Ask if the agency takes a commission (usually 20 percent) or if the agency discount is passed on to you.

Tips to consider if you have a Marketing/Ad Manger:

Work with well-known, reputable companies and vendors. Even if you take on the task, you will still need to contract services to obtain the resources to complete the project. Using reputable businesses will increase the opportunity for success!

Do your homework. Look to your local library or get information from the Internet. Research the different ways and methods of creating your marketing plan and placing your advertising.

Create a plan and a budget and stick to it! The failure of marketing and advertising plans derives from the fact that it is not revisited on a regular basis. To see the results of your efforts may take several months. Consumers are exposed to thousands of messages a day so it may take a while for them to react to your marketing messages.

The biggest hurdle to advertising and marketing in the retail automotive industry is the lack of a plan. What type of message are you sending your consumers? No message at all or worse yet the wrong message? A marketing and advertising plan will save your dealership valuable time and money. Defining your marketing and ad strategies with measurable goals will build a framework for consumer satisfaction and increased sales. Be proactive; don’t just react to competition and the change in the market. Get your plan in place and be ready to adjust accordingly if your evaluation (tracking) dictates a change is necessary.

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