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FCA...give us what you already build

Discussion in 'Mopar News' started by James C., Jul 12, 2017.

  1. Zagnut27

    Zagnut27 Jeepaholic

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    Ok, I understand what you're saying but I think you're confusing the terms. A consumer is the end user of a product whether they're an appliance buyer or a car enthusiast. They can also be the customer, or actual purchaser. But then I think it's just semantics....:)
     
  2. GasAxe

    GasAxe Well-Known Member

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    For the purpose of buying vehicles, a consumer picks one off the lot with minimal research beyond price or features. A customer has the self awareness of what they intend to use the vehicle for and does the research to find one that corresponds with their needs. An enthusiast purchases based on their emotional attachment to the vehicle, but is very well versed in their particular taste of vehicles and usually understands they are making compromises to meet their emotional needs.

    Consumers are Red Shirts. Spock is a customer. Kirk is an enthusiast. (I watched Wrath of Kahn again last night.)
     
  3. MoparDanno

    Level III Supporter

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    These are specific terms that have grown up here on Allpar ( from Bob S I believe ). Customer is someone who buys a car for a reason other than as a transportation appliance. Consumers are the ones who view cars as appliances..

    At least that is my understanding of the differentiation between them.
     
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  4. MoparDanno

    Level III Supporter

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    Much more better than my bumbling way of putting it. Ignore mine and pay attention to this one. lol
     
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  5. valiant67

    valiant67 ...

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    Just because the forum assigns different meanings to customer and consumer does not mean the rest of the world does.
     
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  6. GasAxe

    GasAxe Well-Known Member

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    True, but it helps to employ the definition that OEM's use when we discuss who FCA is targeting and why. And I'm assuming it's an OEM definition because Bob Sheaves told us so...
     
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  7. aldo90731

    Level III Supporter

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    In its simplest terms: TOTAL SALES = SALES TO NEW CUSTOMER + SALES TO EXISTING CUSTOMERS

    In the US and Canada markets, the ratio of first-time to returning buyers is about 1/3 first-time to 2/3 returning.

    Or using the formula above: 100% SALES = 33% NEW CUSTOMERS + 67% EXISTING CUSTOMERS.

    Which means that customer retention has a greater probability of success than a customer conquesting strategy in these markets.

    This is not to say that automakers shouldn't conquest. All this means is that the natural focus of automakers in this mature market should be first to retain customers, second to attract new ones.

    Retaining vs attracting new customers also happens to provide different benefits to an automaker:

    Customer retention is where most of the profits come from. Loyal customers translate directly into lower operating costs because it takes significantly fewer marketing dollars to keep them, and keep them happy. This is a key part of the reason fullsize pickups are so profitable: it is the most loyal segment out there.

    Loyal customers also provide a sales "baseline" that protects the automaker through economic cycles. This is the reason Toyota and Honda sales are more stable through thick-and-thin than of most other brands, and also why they can make money on Camrys and Accords at prices that competitors cannot.


    Conquesting new customers brings growth, new blood into the business, and increases the automaker's chances of future relevance. But new customers tend to be, by definition, less loyal, which means they require constant attention on every front: on styling, on performance, on quality, on brand image, on innovation and on service. Because they are less loyal, attracting new customers usually means your product gets cross-shopped more, putting pressure on prices. Toyota can keep selling boring Camrys and ugly Corollas with lower incentives because most of its buyers are loyal; Nissan needs to keep dialing up excitement, the performance and the incentives or sales petter out.

    Automakers like FCA, Nissan and Mitsubishi rely on a higher proportion of conquests than is the market norm. This is why they also report some of the highest incentives, and show greater sales volatility through economic cycles.​

    Toyota and Honda got where they are today by paying an inordinate amount of attention to the retention part of the equation. Yes, they are now having to relearn how to attract new customers, especially as millennial enter the market. But they now have the luxury of a stable customer base to keep the business going while they figure it out.

    Growth markets are different. México, with a much younger population and a growing economy, has a different sales ratio.

    In Mexico, approximately 100% SALES = 40% RETENTION + 60% CONQUESTING.

    These proportions call for a different strategy, one that can focus more on conquesting than on retention.

    Nevertheless, FAMILIARITY with your brand is an incredible sales lubricant. So, in the long-term, a customer-retention strategy is always a safe means to achieve organic growth, because you are retaining customers while you add new ones, instead of constantly replacing them.

    The triggers for retention and for conquesting tend to overlap, but in the aggregate, some stand out with each group:

    TRIGGERS FOR RETENTION

    • PRODUCT QUALITY
    • CUSTOMER SERVICE
    • PRODUCT SAFETY
    • COST OF OWNERSHIP/OVERALL VALUE

    TRIGGERS FOR CONQUESTING

    • PRODUCT DESIGN
    • PRODUCT PERFORMANCE
    • PURCHASE PRICE
    • PRODUCT INNOVATION
    • BRAND IMAGE

    Notice that the triggers for retention tend to be mostly rational, while the triggers for conquesting tend to be mostly emotional. This is because it takes a stronger emotional reaction to lure customers unfamiliar with your product or your brand.

    Fuel Efficiency in itself is not usually a strong means for conquesting, unless an automaker happens to offer something unique in the segment that no one else has, like the Ram 1500 EcoDiesel.

    Sorry for the long write up. But based on my conversations with people at FCA, my feeling is that their understanding of the interactions between customer retention vs customer conquesting, and the role each group plays on overall strategy is not well understood. Or at least not well internalized throughout the organization. It is because of this, that I cringe every time I come on here and see people drool over attracting new customers and dismiss existing ones.
     
    #67 aldo90731, Jul 13, 2017
    Last edited: Jul 13, 2017
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  8. KrisW

    KrisW Well-Known Member

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    One other difference about "enthusiasts", is that they often buy used vehicles rather than new (think of Jeepers buying Wranglers to do up). As such, they don't count as customers. I'm not saying all enthusiasts are like this, but many are - it's a very cost-effective way to experience and enjoy many different cars.

    This is the paradox of being a car enthusiast: the model you'd like the company to make is a model you yourself would not buy new. The company, being only able to sell new cars, has to sell a product that the new-car buyer wants, and that doesn't always align with what the "faithful" would like. The result is complaints of "dumbing down" or "losing the soul" of a brand, but it's just market realities... you make the kind of thing that is popular, and tread the fine line between "interesting, but too quirky to live with" and the appliance-like "Least Objectionable Automobile".
     
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  9. MPE426HEMI

    MPE426HEMI Well-Known Member

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    Here's the Double Role:
    A Customer can be a consumer if he purchases the product/service and self consumes it.
     
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  10. 77 Monaco Brougham

    77 Monaco Brougham Active Member

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    I'm not a bit sorry for your long write up. It did a great job of explaining the marketing situation the automotive industry faces without having to be an MBA to understand it!;)
     
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  11. Mike V.

    Mike V. Mopar-nac The Moderator

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    Try arguing with Bob Sheaves about it instead ;)

    Mike
     
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  12. 77 Monaco Brougham

    77 Monaco Brougham Active Member

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    You left out one little thing......

    Daimler = "The Borg":p:D
     
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  13. Mike V.

    Mike V. Mopar-nac The Moderator

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    This is a great write up and I appreciate you explaining it. However it does not address the margin issues that are very apparent in certain vehicle classes. This is a big piece of the puzzle also.

    Mike
     
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  14. Zagnut27

    Zagnut27 Jeepaholic

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    Bob is an engineer, and I respect his knowledge about engineering. I have enough knowledge and experience in the business world to pit it against anyone here, including Bob. Just because he assigns meaning to terms, does not make it law.
     
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  15. Zagnut27

    Zagnut27 Jeepaholic

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    Amen.
     
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  16. valiant67

    valiant67 ...

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    Then there's the problem that the Dodge brand strategy is basically chasing the enthusiast.
     
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  17. Citation84

    Citation84 Well-Known Member

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  18. MJAB

    MJAB Well-Known Member

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    The market in U.S.A. and also elsewhere changed post-2008 crisis with decrease of "mainstream" customer reflecting the change of buying power distribution across population.

    To add that in U.S.A. there is also a change in the weight of demographic sub-segmentation.

    For example the growth of "hispanic americans" has since some years the increasing attention of automotive companies.

    "The Rise of the Hispanic Car Buyer: A Market Phenomenon"
    The Rise of the Hispanic Car Buyer: A Market Phenomenon (at http://edge.entravision.com/2016/06/16/the-rise-of-the-hispanic-car-buyer-an-astonishing-market-phenomenon/ )

    "How Dealers Can Reach the Underserved Hispanic Market"
    How Dealers Can Reach the Underserved Hispanic Market - Dealer Marketing (at http://www.dealermarketing.com/how-dealers-can-reach-the-underserved-hispanic-market/ )

    "Younger, Faster and Indulgent: Latino Consumers Drive Auto Growth"
    Younger, Faster and Indulgent: Latino Consumers Drive Auto Growth (at https://www.mediavillage.com/article/younger-faster-and-indulgent-latino-consumers-drive-auto-growth/ )

    "Chrysler Brand Launches “Hero” Campaign for Hispanic Market"
    https://www.portada-online.com/2017/06/21/chrysler-brand-launches-hero-campaign-for-hispanic-market/
     
  19. suzq044

    suzq044 Resident Photoshop Nerd

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    Yeah I can see that. The enthusiast is often the "Built, not bought" crowd. I think they also market to the dreamers, and maybe those who have the cash for a daily that suits their personality while they work on that project or in between projects, or tired of the project breaking down lol . Not to mention the Status-seekers, with the top of the line SRT variants, even if they don't tow with it or track it, but daily-drive it.

    For Jeep, picture an upcoming Grand Wagoneer (or if it's easier, an Overland Summit or Trailhawk Grand Cherokee), towing a fully customized '68 CJ8 for the trail. For Dodge, that SRT Durango towing the '71 'cuda or '68 Charger for the show, or a Viper ACR to the track day. There is something to be said for modern creature comforts on the trek home after a long day at the track, trail, or even just the 'show.
     
    #79 suzq044, Jul 13, 2017
    Last edited: Jul 13, 2017
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  20. BobbiBigWheels

    BobbiBigWheels The "Front-Line" Perspective

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    The way I interpret the difference is that a consumer must be conquested, a customer must be catered to; ie - customers have a loyalty and will attempt to give "their" brand first shot at it before becoming a consumer.
     
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