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MARKETING OF CAR DEALERSHIPS AND CAR LOTS


FEATURES OF THE INDUSTRY

Car sales through car dealerships and car lots are major parts of the car market, which has several significant features that affect the development of an effective marketing mix and the overall success of the business. Here are the main features in question:

• Consumer perception. Although car dealerships and car lots sell both new and used cars (e.g., after a trade-in), the general consumer perception of car dealerships is more focused on the fact that they specialize in selling new cars and are authorized dealers of specific car manufacturers. In contrast, car lots are perceived by customers more as outlets where private entrepreneurs or small car companies buy and sell either used cars or new car models that are not supplied to the country by an authorized dealer. Both types have their advantages and disadvantages and respond to different needs and preferences of car buyers.

• The nature of competition. Car dealerships and car lots compete in a slightly different competitive environment. While car dealerships mostly compete with each other and are focused on the category of consumers who need not only a new car, but also official guarantees, quality service, car loans, leasing, insurance and other services, car lots compete with each other and with the huge market of used cars owned by private owners. Accordingly, the situation is somewhat more complicated for car lots, as their target audience is more interested in the car itself and its price than in additional services, which limits the available set of marketing tools and requires them to be more aggressive with those marketing tools that have proven to be effective.

• Market size. According to open sources, in many countries more than 90% of car sales involve used cars, which is a problem for car dealerships with their image as sellers of new cars. This consumer perception actually means that the major share of the car market is out of reach of the dealerships if they fail to attract potential buyers through marketing. The task of marketers is to create a market positioning that would make potential buyers of used cars consider the alternative of a new car.

• Damaged cars. It should be noted that both the car dealerships and the car lot segments in many countries have been significantly affected by the dominance of imported damanged cars after a car accident, privately purchased from insurance companies, particularly in the United States, imported in a damaged condition and repaired within the country. The damaged car market affects car dealerships by providing an opportunity to buy a car of the last years of production, which, after restoration, will not be visually distinguishable from a new car. Car lots in many countries are usually the segment that actively offers used cars after restoration and repair, competing with private dealers who import such cars on their own.

• The importance of marketplaces. Marketplaces play an important role in today's automotive market due to their ability to create a convenient and efficient environment for communication between sellers and buyers. They expand the availability of car offers, allowing buyers to see the full range of models and brands offered on the market. By providing the ability to compare prices, features, and reviews, marketplaces help buyers make an informed choice. In general, marketplaces significantly increase competition in the market, when a potential buyer can see all the options at once, which requires market participants to be more active and effective in marketing to achieve results in such a competitive environment.

• Marketing imbalance. The imbalance in marketing between car dealerships and car lots is the result of differences in financial capabilities, access to advertising resources and manufacturer partnership programs. Conditions that favor car dealerships, such as direct access to new models, official support, and greater advertising opportunities, can create an uneven playing field. Car lots, on the other hand, usually have limited resources and limited access to automakers' marketing programs, which hampers their ability to compete. This situation certainly does not work in favor of car lots, but experienced marketers know how to turn the industry's shortcomings into a competitive advantage for their own company.

• After-sales service. For car dealerships and car lots, after-sales service is a key component of the business, as servicing cars under warranty and selling original spare parts is a high-margin part of the business. At the same time, after-sales service should be positioned as a service rather than a source of income for the dealership, which requires some effort from marketers who need to convince car owners that they are interested in servicing and repairing their cars at dealerships. In the case of car lots, the after-sales service should be somewhat different and less intrusive, as used car buyers usually prefer to have a free choice of repair shop where they want to be serviced. The emphasis should be on helping to find high-quality and inexpensive spare parts, using modern diagnostic equipment, qualified technicians, etc.

• Seasonality. The seasonality of used car sales depends largely on the preferences of potential buyers, who prefer to buy cars in spring and summer rather than in autumn or winter. When it comes to new cars, buyers pay attention to the year of production - some prefer to buy a car from the first batch at the beginning of the year, while others try to wait for discounts on cars of the current year before the next year's batch comes into the market. Experienced marketers know which marketing incentives and in what sequence will be most effective, taking into account the seasonality factor.

Of course, the list of features of the car market can be extended if we consider different types of cars and different price segments, but for a general understanding of the market that affects the marketing of a car dealership or car lot, the above factors are crucial. So, how to compete in such conditions and how to build an effective marketing mix in the business of car sales? How to avoid annoying marketing mistakes that even large car dealerships with full-time marketers make? How to prevent the company's development and success in the market from being hampered by wrong marketing decisions and choices?


SOME GENERAL STRATEGIES AND APPROACHESS

In general, the car sales industry is characterized by quite strong marketing, which uses different approaches depending on the capabilities and marketing strategy of the market player. Here are the main marketing strategies, approaches, and tools used by most players:

• Integrated marketing. Theoretically, marketing a certain brand or popular car model is not the same as marketing a car dealership or car lot. The former is a product, and the latter is a place of purchase. However, in practice, the situation is somewhat different. Buyers of new cars consciously or unconsciously make a choice in a matrix paradigm, considering both car per se and the dealership, where car means the advantages of the car model and its price, and dealership means all other characteristics, such as prestige and marketing presence of the dealership in the public field, quality of service at all stages of interaction, loans, leasing, insurance, after-sales service, warranty, loyalty program, etc. To a lesser extent, the same applies to car lots. This means that car dealerships cannot neglect the marketing of the car models they sell, and automakers cannot help but enter into partnerships with car dealerships, including joint marketing. The task of marketers is to develop a unique integration of product marketing with point-of-sale marketing.

• Branding and positioning. Mostly the market players use two approaches - either strong branding and positioning of the dealership itself, or using the automaker's brand. The first approach is more typical for large dealerships representing different automakers and different car brands. The second approach makes more sense when the dealership sells only one or related car brands, which allows for active integration of secondary associations, i.e. transferring the image and consumer perception of the car brand to the dealership or car lot. In general, other balanced branding and market positioning options are possible. Experienced marketers know how to integrate and balance car dealership branding and car branding in a single mix, how to link points of parity and points of differentiation depending on the chosen branding strategy.

• Traditional marketing. The auto trade remains one of the few industries where traditional marketing still plays a significant role. Traditional marketing of car dealerships is mainly based on the use of traditional advertising channels, such as television, radio and the press, to reach a mass audience and attract the attention of potential buyers. These channels provide an opportunity to showcase new car models, promotions and special offers. In addition, car dealerships and car lots actively use billboards and other outdoor advertising, especially in high traffic areas, to attract attention and generate interest among drivers. This approach allows car dealerships to create widespread awareness of their offerings among different segments of the population, generate initial interest and attract potential customers to visit the showroom. The task of marketers is to create such visualization and messages that distinguish the car dealership from the competition.

• Digital marketing ecosystem. The digital marketing ecosystem for car dealerships and car lots includes a wide range of internet strategies and tools, including websites, social media, email, digital advertising, content marketing, search engine optimization (SEO), and data analytics. This ecosystem allows car dealerships and car lots to create effective and personalized marketing campaigns, interact with customers in the online environment, track the effectiveness of their activities, and adapt them to achieve the best results. The digital marketing ecosystem, compared to traditional marketing, has more opportunities to integrate car marketing and dealership marketing. Indeed, advertising on TV, radio or billboards is very limited in terms of time or area, while digital tools allow to develop the buyer's interest gradually and in the direction he or she is interested in - visualization and characteristics of the car, terms of sale, after-sales service and warranty, loans, leasing, insurance, etc.

• POS marketing. POS marketing of car dealerships is strategically important. The appearance of the showroom, which is perfectly visible from the roadway, is an important element in creating awareness of the dealership and the first impression of potential customers. Such elements as attractive outside look, optimally placed billboards, large logos and bright lighting generate interest and form an image in the minds of potential customers before they even enter the showroom. On the other hand, marketing inside the showroom is even more important - the impression of the exterior should be reinforced and built upon by the impression of the interior. Properly organized interior space of the car dealership, with high-quality modern interior design, carefully placed cars, unobtrusive but informative marketing elements about additional services and maintenance - all this allows to increase the overall level of comfort and pleasure from visiting the car dealership. This approach not only attracts customers, but also helps to increase conversion and build a positive brand image.

• Reputation management (SERM). Car dealerships' reputation management (SERM) is a strategically important aspect of successful operations, as modern customers actively use online reviews and ratings when choosing a car dealership or car lot. This strategy includes monitoring and analyzing customer reviews on social media and other online resources, as well as actively interacting with customers to resolve any problems or negative feedback. The services provided by a car dealership and the quality of service play a key role in building a positive image, so it is important to use SERM to maintain reputation, increase customer trust, and attract new customers.

It should be noted that within one article, we cannot show all the pitfalls or demonstrate all the marketing methods and tools specific to the mentioned industry. In other words, these are just a few examples of quite general marketing approaches that can be applied to car dealerships and car lots. From a practical point of view, everything is much more complicated - the choice of a specific marketing strategy and tools depends on the target audience, competitive environment, and unique advantages of the company, etc. At the same time, it is desirable to understand that marketing of car dealerships and lots may encounter a number of specific problems that are unique to each individual case and require an individual approach to their solution.

Achieving the commercial objectives of a company through effective marketing requires a deep understanding of the market situation, consumer needs, the ability to analyze and explore alternatives, and a creative approach to problem-solving. Our company has extensive experience in defining optimal marketing strategies for our clients' businesses, creating a strong brand and market positioning, as well as developing a marketing mix and implementing the chosen strategy. You can familiarize yourself with the services and solutions our company offers on the "Services" and "Solutions" pages, respectively.