Don’t add to your advertising budget – Replace with something systematic and sustainable

When developing a marketing strategy, efficiency is the key.

Let’s say that in your market area, 20,000 vehicles will be sold by franchised dealers during the month of June.  You know that last month (May) there were approximately this many sold and you have reason to believe that June will be similar.  It might be or it might not be.  The total volume for franchised dealers fluctuates with the market and the demand and there is nothing you can do legitimately to change that.

Your dealership has been averaging about 200 new and used cars a month for the last few months which represents 1% of the market.  You are a Ford dealer and you also know that the Ford dealers in your area have been responsible for 13% of the total market, which translates to 2,600 new and used per month for that segment.  This also means that your market share of those competitors is 7.7% as your baseline.

Your marketing strategy should be to increase your market share of 1% of the entire franchised market to 1.2% or more and your 7.7% of the Ford dealers share to 8.5% or more.  If you only concentrate on the numbers of sales in a month, you are making yourself blind to the only part of the equation that you actually have control over; market share.  That is to say that if your market only yields 15,000 vehicles in May and you still sold 200, you have increased your market share substantially.  Conversely, if the market yields 25,000 in May and you still sell 200, you have lost a significant share of your market.  In other words, you can’t reasonably control the volume of the market in any given month, you can only reasonably try to control your share of that market.

When I say reasonably, I mean that creating buyers who are not ready to buy entails loss of gross and loss of potential sales in ensuing months.  Reasonably also has to do with how much you spend to try to create ‘incremental’ sales over your baseline.  Without a systematic and consistent plan to build your market share, you have two unreasonable options:  1.  Burn down your competitors.  Unethical and illegal, but it would reduce the number of places where your product could be purchased. 2. Spend a fortune on a TV (or other source) marketing blitz.  When I say a fortune, I’m estimating that at least $500,000 would give you some incremental sales, but they would be extremely unreasonably expensive.

Expecting to make a substantial increase in your market share in a short period of time by spending an extra $30-$40K is not sound thinking.  Replacing haphazard and non-systematic marketing methods with more systematic, consistent and quantified methods is the only thing that can make sense to build your market share.  Use behavioral data to keep your message in front of those in their buying cycle and do it on a consistent basis and you will systematically grow your share over time and not spend extra money in the process.  And, speaking of processes, if you don’t have an organization that makes customers feel like they are buying rather than being ‘sold’, any hopes of growing market share will be fleeting at best.


About dealerite/in association with AP Level 4

National affiliations of professionals who are engaged in changing the culture of the automobile retail business. Associated with AP Level 4 and Edifice Group. These companies are bringing sustainable marketing which has proven quantifiable improvements in a dealer's market share performance
This entry was posted in Auto Dealer Solutions, Behavioral Data, Dealerite Blog and tagged , , , , , , , , . Bookmark the permalink.

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