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Consumer Attitude On PricingPresented by
Rick WainschelKelley Blue Book
VP, Marketing Research & Brand Communications
October 18, 2007
BIG RELEVANT REPRESENTATIVE
12%
14%
17%
17%
20%
23%
26%
29%
33%
46%
AutoTrader.com
Yahoo! Autos
Nissan
ConsumerReports.org
Chevrolet
Ford
Honda
Edmunds.com
Toyota
Kelley Blue Book
Source: J.D Power and Associates 2006 New Autoshopper .com (NAS) Study
§ Age
§ Gender
§ Ethnicity
§ Geography
§ Make
§ Segment
Top 15 Independent and Manufacturer Web Sites Visited
85% In-market shoppers
87% Planning to purchase in
6 mos.
of which
Source: Recruited From Kbb.com New Car Pricing Reports
Why Kelley Blue Book?
Consumers Are Split Regarding Best Price/Dealer Relationship
Source: Kelley Blue Book Survey (October 2007)Q: Which statement below best describes your feelings about the vehicle purchase process?
I am seeking the absolute lowest price and will buy my next vehicle from any dealer who can give me
the best deal
52%
I am seeking a dealer who I can trust and have a relationship
with, even if it means paying a little more than the absolute
lowest price for my next vehicle
48%
Less important…
Trustworthiness, good customer service, and honest repair people / service are important factors to shoppers.
Important Drivers & Attitudes In Choosing A Dealer
Trustworthiness83%
Good Customer Service
81%
Good reputation 72%
Source: Dealer Evaluation Study (February 2007)Q: Assuming that prices were the same at all dealerships, how important are each of the following factors in your decision to purchase a vehicle from a particular dealership?[4-point scale: very important, somewhat important, somewhat unimportant, very unimportant]
What Factors Are Important?-- % Very Important --
Proximity from dealership location 33%
Discounts on future purchases 32%
Number of different services offered 27%
Honest repair people/service
80%
Friendliness of employees
67%
Selection of vehicles available
60%
Majority Of Consumers Prefer A Single Set Price
Single set price, 65%
Negotiating Price, 35%
2-out-of-3 in-market shoppers prefer having a single-set price.
Easy processes and price predictability are key factors.
Source: Dealer Evaluation Study (February 2007)Q: Which statement below best describes your feelings about the vehicle purchase process? Q: You mentioned that you prefer to have a single set price for a vehicle, how important are the following factors to ensure a haggle-free / negotiation free buying experience? [4-Point Scale: Very important, Somewhat important, Somewhat unimportant, Very unimportant]
Ease in obtaining price quote
Ease of obtaining pre-
approval
Quicker buying process
Clear costs, no surprises
Single set price, 65%
Negotiating Price, 35%
Factors Important In Negotiating Price
1-out-of-3 prefer negotiating.
Key reasons are control in negotiating a better price.
Source: Dealer Evaluation Study (February 2007)Q: Which statement below best describes your feelings about the vehicle purchase process? Q: How important are the following factors to help you negotiate the best deal?[4-point scale: very important, somewhat important, somewhat unimportant, very unimportant]
Being incontrol
Better price
Consumers Prefer to Work Their Way Up From Invoice Price
Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: When you purchase or lease your next new vehicle, are you more likely to negotiate...?
When negotiating, consumers prefer to know the invoice price and work their way up
Negotiation Preference
56%
23%16%
5%
0%
20%
40%
60%
80%
Start withinvoicePrice
Start withMSRP
Start withmonthly
payments
Someother way
Consumers Acknowledge Need for Dealer Profits
Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: Recognizing that dealers have to make money to stay in business, what do you feel is a fair profit for them to make per vehicle?
Almost half of consumers believe dealers should make between $500 and $1,000 of profit per (new) vehicle
Fair Dealer Profit (According to Consumers)
22%
47%
17%
9%5%
0%
25%
50%
Less than$500
$500-$1,000
$1001-$1,500
$1,501-$2,000
More than$2,000
Consumer Decisions Go Beyond Pure Price
Source: Automotive Purchasing and Pricing Attitude Study (September 2006)Q: When you purchase or lease your next new vehicle, which of the following offers is most appealing to you?
The largest percentage of consumers are driven by financing offers rather than pure price.
Preferred Dealer Offers
37%
19% 19%14%
10%
0%
25%
50%
0%Financing
CashRebate(10%)
Lowmonthly
payments
$500 overinvoice
Employeepricing
programs
Types of Online Information Sought
Source: Dealer Best Practices Survey (August 2007)Q: While shopping for your vehicle online, please select which of the following you used in your research?
Information most sought by consumers: pricing
Other important information: photos/360s, ratings/reviews, comparisons Expected
selling price81%
Price with options83%
Vehicle photos/360s70%
Consumer reviews/ratings
70%
Expert reviews69%%
Side-by-sidecomparisons
63%
• Price is important, but consumers also want:
– A relationship with a dealer they can trust– An easy process with a minimum of surprises– Other information (e.g., reviews/ratings, photos/360s) to help make a
decision
• Other aspects of purchasing process (e.g., financing) are also taken into consideration
• Consumers are realistic about need for dealer profits
Key Takeaways
Thank you!