Since Karl Benz built the first Motowagen in 1885 more than 130 years ago, the motorcar has arguably been as important a status symbol as an individual’s home. But now, thanks to the arrival of car-sharing services, as well as driverless cars, the nature of car ownership is going through its most dramatic revolution since Henry Ford began the mass production of the Model T.
The automotive industry is changing fast and while car manufacturers need to ensure that they are moving to follow these trends, marketers within these companies also need to be aware that this revolution is going to have a dramatic effect on their part of the business as well.
The growth of Uber and Lyft in the US has been startling. As of the end of last summer, there were nearly 16 million monthly active users of Uber in the country, more than quadruple the not insignificant 3.6 million monthly active users of Lyft.
Uber has also moved into the business of self-driving cars – not without problems – but this is indicative of a trend that is also affecting the wider automobile industry. What it means to own a car has changed. No longer are cars a status symbol – they’ve become utilities.
So while new services and revenue streams for car manufacturers are a must, how should they go about marketing? The first step is to come to terms with the idea that existing practices for advertising no longer fits with the current landscape. Instead of emphasizing the car as a status symbol, marketers need to focus more time on what consumers actually need versus what we think they want.
Sharing not owning
Many argue that among younger generations – those most likely to be using services such as Uber – car ownership is not as aspirational as it used to be. Fewer and fewer young people hold driving licenses. Car dealers need to alter their advertising and marketing tactics in line with this cultural shift.
Manufacturers should recognize that people are less likely to regard their cars as highly as they did in the past. Mercedes is a company that sees which way the wind is blowing. Like fellow German manufacturer BMW, it has launched a peer-to-peer car sharing service, Croove. This is a perfect example of how cars have become more utility than status symbol, with no restrictions on the brand that owners can submit to the pool – the main requirement is simply that the vehicle is in good working order.
The importance of the passenger
While emphasis on a car’s handling and the sense of identity that a vehicle brings was important to the driver in the past, it’s now more important to look at the passenger experience. The growth of ride-hailing services, with ever more ‘professional’ drivers on the road, means the owner of the car needs to think about the passenger’s needs over their own. A comfortable ride, space for luggage and the like should be priorities.
Focus on utility
It may be that some segments of the brand’s audience will be more interested in what a car can do rather than the status and lifestyle associations. With more than 380 million connected cars expected to be on the road by 2021, and fully autonomous cars just a few years away, convenience and user experience will be more important than features like radius and acceleration. Owning a non-autonomous car, Elon Musk predicts, will be akin to owning a horse in just a few years’ time.
Starting in 2017, Millennials are expected to have a purchasing power topping $200 billion. So it is important for the manufacturers to tap into what’s important to this audience. While it’s impossible to pinpoint one single thing that millennials hold dear, sustainability and ecology are likely to chime more closely with a younger person’s values than speed and versatility. Thanks to digital marketing, it’s easier than ever to tailor your message and strategies by demographics. Young people should be approached differently – it’s no longer viable to tell them they’ll be cooler with a Mustang, more attractive with a Mercedes.
A larger point is that brands need to carefully think about who their audience is and what they care about in order to target them effectively. Grasping the enormity of how new technologies are changing people’s perceptions and attitudes towards cars and car ownership will be key to effective marketing and advertising campaigns for the automotive industry. Those that fail to do so may find their brand’s cachet disappearing fast.
Car dealers can, and should be responding to these market changes by altering their own marketing spends. By moving their marketing dollars away from passive media choices like automotive resale sites to more proactive solutions that focus on using data to identify and engage key shoppers, dealers can more effectively reach younger car buyers where they live. Moving beyond the art of the sale will allow dealers to better connect with practicality-minded Millennial buyers.
Don’t miss Eric Brown’s session: How to Turn Up Inventory Turn at the 22nd Digital Dealer Conference & Expo this April 11-13th in Tampa, FL.
Author: Eric Brown
Eric Brown is President and Chief Product Officer of LotLinx. He has extensive experience in building high-growth companies in media, internet technology, health care, and automotive verticals. Experience includes building from the ground up for angel backed start ups or re-engineering acquisitions of international Fortune 100 companies for optimum performance and revenue growth. Founded Dataium in 2009 which grew to become automotive industry’s leader in behavioral data collection and analysis. Exited in 2015 with sale to publicly traded multi-national, IHS, (NASDQ: INFO). Has appeared as guest expert on Fox News, speaker at GLC Global Leadership Conference, NADA Leadership Summit, Automotive News Marketing Summit, JD Power Marketing Roundtable among many others. Contributor for publications such as Automotive News, Forbes, Wall Street Journal, and USA Today. Named Nashville “Innovator of the Year” in 2012.