Sales promotion: Car pricing battles boost promotions - Competition in the car market is forcing a rethink on promotions. Rachel Miller writes

Selling new cars has never been tougher. Where the used-car salesman once had a dodgy reputation, it is the new-car companies that the British no longer trust. In turn, car marketing and promotions are under scrutiny.

Selling new cars has never been tougher. Where the used-car

salesman once had a dodgy reputation, it is the new-car companies that

the British no longer trust. In turn, car marketing and promotions are

under scrutiny.



Agencies are having to find new ways to help car-makers attract

customers.



It isn’t easy. Consumers are worried about rip-off prices - and they

have good reason. UK consumers buying V-reg cars last August paid pounds

1bn more than if they had bought the same cars in continental Europe,

according to the Competition Commission report published in April.



The report also shows that prices in the UK are 10% to 12% higher than

in similar countries in Europe. That means the consumer is paying pounds

1100 too much for the average car.



A survey by the Chartered Institute of Marketing found that 92% of

consumers believe manufacturers and dealers are ripping them off.



In June, Stephen Byers, trade and industry secretary, made some initial

moves to bring down car prices and pledged to make it easier for dealers

to buy cars from abroad.



But the real shift will not take place until European Union legislation

that perpetuates the system of tied dealers - known as the Block

Exemption - is challenged. The report advocates major changes, which

could see new car supermarkets in Britain displaying every make and

model of car side by side. This would enable consumers to compare prices

and specifications.



’There is a huge amount of speculation and analysis about the future of

dealer networks,’ says Phil Bourne, managing director of KLP Euro RSCG,

Peugeot’s sales promotion agency. ’The retailing landscape for car sales

is going to be dramatically different. Car companies are under scrutiny

about prices and customers are less dependent on dealers. People are

better informed and are using the internet to find out more.’



So where does that leave the car marketers and their promotions? Can

incentives or competitions convert cynics into customers?



’Traditionally, promotions in the car industry have been about driving

traffic to the dealers,’ says Bourne. ’Now the primary role for sales

promotion is to infiltrate other environments and forge new

relationships.’



This means taking the car to the consumer, rather than trying to entice

the customer to the car.





Fashion connection



Recent Peugeot activities have included a joint promotion with bra-maker

Gossard to reinforce the brand positioning of the Peugeot 106.



KLP Euro RSCG put together a campaign targeting young, independent,

fashion-conscious women, which ran in 740 UK retail outlets.



The incentives included a chance for Gossard purchasers to win a Peugeot

106 GTI and there were in-store promotional teams in four cities.



’We used the promotion to collect data and drive traffic,’ says

Bourne.



’It is about getting direct access to the right prospects, outside the

traditional car territories. Many women do experience anxiety when they

visit dealerships. They think they are going to be patronised or given

the hard sell.



’The promotion gave us wide exposure and, in some stores, Gossard sales

were up 50%,’ says Bourne.



Although the promotion was a hit for Gossard, its impact on car sales

was unknown as Peugeot did not measure the results. Yet car-makers are

using more sophisticated promotional techniques.



’The role of promotions within the car industry has changed

significantly over the past five years. There are far fewer sales

promotions operating in isolation, which is a good thing. Promotional

techniques are being used more intelligently and strategically and they

are an integral part of the brand building,’ says Bourne.



Integration is vital, says Keith O’Loughlin, client services director at

The Russell Organisation, an agency with automotive sector associations

and whose clients include BMW, Volvo and Honda.



’Sales promotion and advertising must go hand in hand. You can get lost

at a local level if you haven’t got a recognisable brand and product

strategy,’ says O’Loughlin.



Charles Endacott, managing director of Endacott RJB Marketing, another

automotive specialist, agrees: ’Historically, most promotions have been

stand-alone campaigns designed to drive traffic into the showrooms,

where sales staff were expected to close the sale,’ he says.



’Sales promotion needs to be seen as part of a cohesive marketing and

sales process that starts with identifying the target audience and what

turns them on, but then continues through to after-sales service to

generate maximum brand loyalty,’ he says.





Damaging activity



Selling cars calls for a 360-degree marketing strategy, says Tim Groves,

account director at Interfocus.



’The style, tone, approach and identity of the brand or marque must

remain as a constant seam in the work,’ he says. ’Brand values must be

upheld in any activity, no matter how small. If this isn’t done, it can

be self-defeating or, even worse, damaging.’



Interfocus is responsible for devising and implementing an integrated

campaign for Lexus.



’Luxury vehicle launches often involve extensive and costly national

track days, golf days or dinners, while volume marques can only really

afford to offer this to fleet buyers and key driver,’ says Groves.



The agency came up with a promotion to increase Lexus LS400 test drives

and sales, which featured a year’s National Trust membership as part of

the test drive invitation package.



’The focus was very much on brand values and being environmentally

responsible,’ says Groves.



’It provided purpose and interest to the test-drive, had lasting value

for the customer and also encouraged use of the car’s navigation system

to locate Trust sites. The initial mailer contained a Trust handbook, so

even if the test drive was not taken, this would still generate

goodwill.’



Of course, there’s a world of difference between an expensive executive

car and a hatchback.



’Manufacturers of luxury and super cars need to look for a match between

the values inherent in their brand and the event,’ says Graham

Singleton, senior consultant at brand strategists,The Value

Engineers.



But he warns: ’Luxury and super sports car manufacturers have to be

aware that the people who value promotional material are often the

people who do not own, and have no chance of ever owning, the car

itself.’



With mainstream cars, he says: ’The brands that have the most consistent

and focused advertising have the most consistent promotional events. So

Peugeot is offering cruises, with the core values of freedom and escape,

whereas all Rover offers are cash-backs and roll backs.’



In fact, Rover is doing surprisingly well in a year that has seen the

dramatic demise of its relationship with BMW and a takeover by

Pheonix.



Its success seems to boil down to some rather old-fashioned sales

promotions.



Rover began the year with a prize draw that offered an opportunity to

spend a week on Richard Branson’s Necker Island in the British Virgin

Islands.



In April and May, however, Rover opted for a series of cashbacks of up

to pounds 2,000 and other finance packages. The result was that Rover

enjoyed its best April ever and sold 20,000 cars.



The Rover 25 achieved 9910 sales, compared with Rover 200 sales of 3442

in April 1999. The April 2000 sales figures made the Rover 25 the

best-selling car in the UK, a position it has not held since December

1985.



Now, new Rover chief executive Kevin Howe has vowed to slash the

company’s above-the-line spend and concentrate on below-the-line.



Rover’s experience reveals the potential power of sales promotions to

sell cars. ’It is all about driving traffic and ultimately about driving

sales,’ says Anya Tinklin, account manager at agency IMP. ’The

above-the-line campaigns drive awareness but then our activity goes

right to the heart of the hot prospects.’





Italian job



IMP handles below the line for Fiat, working with sister companies

D’Arcy and MediaVest which look after Fiat’s advertising and media

buying respectively.



’Fiat is all about being bright, new and fresh. As a marque it stands

for safety, reliability and Italian flair,’ says Tinklin.



In February this year, IMP promoted the new Fiat Punto. ’The new Punto

launched in November 1999. We wanted to drive footfall to the

dealerships and increase test drives,’ says Tinklin. Aimed at 18- to

26-year-olds, the campaign, ’New Punto, New You’, centred on a

competition to win pounds 1000 of new clothes.



’There was massive point-of-sale in all 220 dealerships, with entry

tickets and a tie-breaker question - ’Why do you want a new you?’ ’ says

Tinklin.



The event attracted ’a staggering response’ and the judges had to choose

ten winners from 5000 entries.



Fiat then turned its attention to its family car, the Multipla. IMP took

the car to its target audience of young families by creating special

Multipla Worlds at Chessington World of Adventures and Alton Towers.



’We wanted to capture young families when they were having a good time,’

says Tinklin. ’We approached people who seemed interested - we didn’t

want to do a hard sell.’



In both amusement parks, IMP constructed a blue dome to house the car

and featured incentives including competitions to win a Multipla and

also to win a family holiday for six. Inside the blue dome, there were

attractions for children such as Multipla Scalectrix and goody bags.



The Multipla has an unusual appearance, due to the fact that it was

designed from the inside out. As a result, its advertising theme is

’Makes sense on the inside’.



At Chessington, 60% of those that took the courtesy car entered the

competition, while 30% of the 11,000 that visited the blue dome also

entered. More than 300 people signed up to take test drives.



Although Fiat took its Multipla promotion away from the dealer

environment, the dealer network is still important to Fiat, says

Tinklin. But, he warns : ’The internet is having a growing impact on the

market and there are going to be a lot of changes.’



Thousands of car-buyers are using the web to gather information and many

are buying at sites such as autobytel.co.uk and oneswoop.co.uk.



As competition hots up, the role of sales promotion could become more

important. A well-targeted promotion that fits the car brand may well

become the deciding factor between two cars with similar price tags.





CAR FACTS



- New car sales to private buyers fell by 11% in January 2000, due to

allegations of ’rip-off’ prices in the UK.



- 1999 was the first year since 1991 to see a decrease in new car

registrations.



- 58% of ABs have purchased a new or nearly new car, of which 39% were

bought from a franchised dealer, 26% from an independent used car dealer

and 26% from a private seller.



- 16% of consumers would consider going abroad to buy a car, while 15%

are delaying purchase in the expectation that prices will fall.



- Only 5% of consumers would currently consider buying a car through the

internet.



Source: Mintel





HONDA CASE STUDY



Honda uses sales promotion strategically to match the audience to the

marque.



’The key to sales promotion is the detail,’ says Stephen Hollings, head

of marketing at Honda. ’If you get the detail right, the timing right

and the dealer commitment right, then sales promotions can be very

successful.’



Despite the gloom in the car industry this year, Honda has been able to

announce that another Honda model is to be made in Swindon. ’The basis

of the Honda business is UK manufacturing,’ says Hollings. ’Honda has

got a lot going for it and we have been able to send out the ’Built in

Britain’ message. The April promotions have been very successful.’



The three April promotions were aimed at different target audiences and

each had distinctive creative approaches.



The first was a used-car promotion put together by its below-the-line

agency, The Russell Organisation, and backed by local ads devised by

CDP.



’The promotion was based on an incentive to win back the value of the

car you were trading in,’ explains Keith O’Loughlin, client services

director at The Russell Organisation.



’Honda sold 1500 used cars against 800 on the same weekend the year

before. They were very pleased with the results in what was a difficult

market.’



The second promotion focused on the latest Honda recreational vehicle,

the HRV5, which has seen widespread exposure thanks to the ’Five Go Mad

in Newquay’ ad campaign.



’This was a test-drive incentive backed by a competition offering a

series of lifestyle prizes which you could win for a year - including an

HRV5, a Nokia phone and membership to a David Lloyd health club,’

explains O’Loughlin.



’It was very youth- and consumer-oriented and the network were very

pleased with the response.’



The third weekend was aimed firmly at families and was themed around

motorsport, as it took place over the weekend of the British Grand

Prix.



A straw poll of the dealers revealed that the promotions had a dramatic

effect. According to Hollings, several dealers described it as the ’best

used-car weekend ever’, with one selling 23 cars.



’We wanted to be positive and create some energy as we came out of a

tough March,’ says Hollings. ’We wanted to generate a buzz and

excitement at a time when the motor industry was doing a lot of

navel-gazing and getting a bad press.’



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