IBM survey of car-buying habits finds brand loyalty not a family affair
Nov 15, 2012 (Menafn - Detroit Free Press - McClatchy-Tribune Information Services via COMTEX) --BRAND LOYALTY IS ELUSIVE -- even within the same family, a new IBM survey into car buying habits released today shows.
More than three-quarters of car buyers with at least two vehicles in the driveway report they are from different automakers, according to the survey of 2,029 consumers nationwide conducted in October.
Automakers devote vast resources to try to attract new buyers to their brand and then keep them. Ideally, they want first-time buyers to pick their entry-level vehicles and grow up with the brand, buying ever-bigger and more profitable models over the years. The assumption is it is easier and less costly to retain a loyal customer than convince a buyer to switch to a new automaker, but a growing number of studies shows brand loyalty has eroded over the years.
Marketing to a fractured market can be expensive.
The IBM research suggests automakers should work harder to ensure current owners remain satisfied with their purchase as long as they own the vehicle because 47% of buyers rely on the recommendation of family and friends, said Kal Gyimesi, automotive leader for IBM's Institute for Business Value.
"But they are not doing everything digitally," Gyimesi said.
Interestingly, it was millennials who are seen as a fickle demographic not bound by brand allegiance that placed the most emphasis on word of mouth from family and others.
The survey shows a greenfield of opportunity to do brand management beyond the point of sale, said Michael Noblett, an associate partner with IBM's Intelligent Transportation services. "If there is no family brand loyalty, there is an opportunity to explore how to influence that," Noblett said, adding that he was shocked by the figures. Having worked for General Motors for 20 years, he is fiercely brand loyal himself.
Although word of mouth is key, most shoppers still do research online before setting foot in a dealership.
Of those who went online for their research, 42% spent less than five hours gathering information, according to the survey conducted by National Analysts Worldwide. The majority -- 63% -- are going directly to the automakers' sites -- more than the number visiting popular third-party sites including Consumer Reports and Kelley Blue Book, and also more than the number doing general web searches.
Roughly half of shoppers are using as many as four information sources by the time their research is done, but their search is limited to only one or two vehicles. Very few cross-shopped more than five vehicles.
When they are ready to head to a dealer, 40% go straight to the outlet where they will make the purchase and 1 in 5 don't even bother with a test drive. Another 28% will make their decision after a single spin in the car.
The lack of loyalty within a family unit presents an opportunity for automakers to go after the whole household and not just focus efforts on a replacement vehicle for individual customers, Gyimesi said.
Technology as a whole helps sell vehicles, the survey found. Safety sells. So does onboard diagnostics that make vehicle maintenance easier.
One way to expand brand loyalty to a household is digital compatibility between vehicles. More than half of customers said they would be more interested in multiple vehicles from the same automaker if it meant smooth and seamless use of their phones and gadgets between vehicles, Gyimesi said.
"People want their information to move with them and like it to be ubiquitous," said Noblett, who at GM was part of the original OnStar telematics team.
Larry Pesce, general manager of infotainment and advanced audio services for Sirius satellite, said he thinks basic imbedded telematics in vehicles will be a market requirement by 2020, whether it is regulated or not as is the case in Europe. "It's an important liability factor," Pesce said of the ability to know a car's exact location and being able to send a collision alert as well as other data.
"You can't rely on having a cell phone for that."
But when it comes to vehicle connectivity, those surveyed listed infotainment systems as the least important technology following integrated navigation systems and voice-activated concierge services. The exception: younger buyers who embraced infotainment systems more.
Contact Alisa Priddle: 313-222-5394 or apriddle@freepress.com
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