Automotive OEMs (Original Equipment Manufacturers) struggle to increase their market share and ROI in a crowded market. The sharpest scythe to cut through the clutter is consumer understanding. There’s been a radical change in car buying psychology and being ignorant of it is no bliss for automakers.
Companies that are reliant on the funnel approach are out of step. (The funnel concept says consumers begin with a pool of brand choices, and as they travel from the funnel’s head down its pipe, they exit with a final option). The consumer decision journey in automotive is no longer linear, as depicted by the funnel metaphor. Marketers must learn and adapt to this new environment.
The truth is consumers are no longer starting their car buying journey with several brands in mind; only a few are on their minds, and collectively, it is known as the initial consideration set.
Brand Perception matters
Brand perceptions and exposure drive consumers’ initial considerations and touchpoints. These brands are three times more likely to be purchased than those not in the initial set.
For years, companies like Chrysler and General Motors relied on solid sales incentives and dealer programs to win during moments of purchase. They have been barking up the wrong tree: the real battle is during the initial and post-purchase phases.
On the other hand, Japanese carmakers such as Toyota and Honda dominate the two phases. They make it to the initial consideration set on sheer brand strength and product quality, which leads to buyer loyalty. US car manufacturers have been unable to integrate strong sales incentives with the consumer’s first-choice principle. So, they must master the new touch points.
For most car marketers, deciding the touchpoints and budget allocation is challenging. Sometimes, shifting marketing efforts from brand advertising to creating a solid digital footprint may be necessary to help them enter the initial consideration set. For other marketers, in-store activities and word-of-mouth marketing might be more effective, focusing on active loyalists instead of passive ones.
As the consumer decision journey becomes more complex, nearly all companies must adopt new methods to measure consumer attitudes, brand performance, and marketing expenditure effectiveness.
Companies may need new messaging to make it to the consumer’s initial consideration set. There may be a need to replace a general message covering all stages with one addressing weaknesses at the initial consideration phase. As part of a marketing campaign, Hyundai, the South Korean automaker, responded to this problem by offering its consumers a return option if they lost their jobs. Hyundai could break into many new consumers’ initial consideration sets with this empathic message based on genuine concern.
The correct messaging calls for realigned spending. But it poses two risks. First, marketers may waste money if their vision is unclear because advertising and other investments are less effective when revenue growth is slow, and funding is tight. Second, marketers will be out of touch if they merely push products instead of providing the support, information, and experiences customers want.
Entering the initial consideration set is the new normal for car manufacturers and marketers. Following the funnel theory may no longer yield results as car buyers narrow their initial choices based on messaging and brand activism. The two are mutually dependent and point the way forward. If automakers miss making it to the initial consideration set, they may as well forget to take their foot off the brake.