Maybe a little on my personal background is in order. I grew up in the car business, literally. My family (both sides actually) have been in the car business, quite literally, since there was a car business. My father is still a dealer, though not as an extension of his father's business (not even in the same market). I began taking an interest in marketing/merchandising as it relates to the auto industry around my sophomore year in High School. I used to sit at my father's desk (when I wasn't too busy sweeping up cigarette butts etc. on his lot) and help spec out cars, evaluate advertising opportunities, and study his interactions, as a very "hands-on" dealer, with his staff. I attended Northwood University on golf and academic scholarships, and graduated with a BBA in Automotive Marketing (an odd degree, I know...NU is the only school in the USA that offers it). I have worked in various capacities in the retail auto industry, most outside of my family's stores. I have worked for one of the largest dealer groups, as well as single points in small towns.

Point is, I don't have any "preconceptions" about the car business that just happen to conveniently fit into my side of this discussion. Any of my conceptions regarding the car business come from a lot of years of experience and formal education. The word preconceptions makes it sound as though you believe I form my opinions, then look for an argument to support them. This is simply not the case.

I feel the need to reiterate that it was you who first compared the car business to a sporting good store (think Golfsmith), by defending the practice of loss leader ads. I simply wanted to highlight what I see as a crucial difference in that comparison. I totally agree with you that they employ a quite different business model, and therefore may not be worth the comparison.

As far as your "intellectual challenge" goes, I'm in. I don't see the business as "victims and predators." Though I believe you do. Here is why: in your first post on this thread, you said "The days of old are gone. Consumers have all of the information tools needed to chart their own course, they can take control of their own fate. What of the personal responsibility to understand what rolling over negative equity means down the road? That falls into the realm of education does it not? We're here to move iron, not be mini Dr Phils." In other words, you believe in the theory of survival of the fittest. If the customers are too weak (read: stupid) to take advantage of all the tools available to them, then we should prey upon their weaknesses in order to move the iron, and they get eaten, right? You made the argument for the very definition of the predator/prey relationship.

I simply see a lot of room for improvement in the business with regard to how we "talk" to our customers. I think that we can do better by setting proper expectations...do you really still wonder why customers "beat us up" for better prices and not salespeople in other verticals?

My only point on this thread so far has been that there are better ways to market our products and services to the car buying public. We need not resort to pricing tricks, numbers juggling, and hard-sells. As Shaun's video and his post seem to suggest, our customers are asking us for better than that.

Tim

PS. I'm not mad, don't you be either. I love marketing as much as I love a lively debate!

Tim,
This GolfSmith/Dealership is an excellent model to help us illustrate that the shopper & seller interaction varies in each vertical AND is highly complex. I challenge you, not to get you to dig into your current position; my reply to you is to give you more data to reflect on.

I am here to tell you that you can't draw comparisons from the GolfSmith experience and a NEW car dealer, but, USED CAR DEALER??? Now you can draw a million parallels and that my friend is TOTALLY a different story.

re: NEW CAR DEALERSHIP EXPERIENCES.
Example: Loss Leaders, Transparency & Our Industry.
Have you ever been a merchandise buyer? I have. Buyers fill merchandising slots. Merchandising slots are extensions of marketing campaigns. Marketing brings them in, merchandising completes the buying process. Pretty simple stuff, you see an ad for a Driver, visit GolfSmith, find that promo item, find it in depth, you also find it with different lofts and shafts. ALSO, you find a sea of other brands and a zillion golf balls, rows and rows of accessories and lots of high margin clothing too! Yumm!!

This is a typical "Catagory Killer" experience. These mega stores exist in industries where demand is high but sales outlets are fragmented (aka: mom and pops). The depth of presentation is so overwhelming that why go anywhere else?

I ask you, did you go anywhere else to shop? Did you grind the commissioned reps for a better price? Probably not. The other outlets are so trivial compared to this goliath AND we’re only talking a few hundred dollars… Why Shop?

Tim, can you see the entire picture that I am drawing?

Let’s talk Business Mechanics.
Try for a moment and duplicate this "category killer's" inventory selection in the auto industry (on the new car side). The cash required to stock every option, in every color and do it with depth (more than one in stock) is... not possible in most brands.

Tim, How could you have not factored this in to your analysis? I know why, because you think that dealers are making consumers into victims and this GolfSmith analysis fits your preconceptions. Heed my intellectual challenge, don't fall prey to seeing victims and preditors.

And lets talk about that "THOROUGH product presentation and demonstration/"test-drive," by a commissioned salesperson".

Amazing things happen when you’re a commissioned sales person working in a category killer that operates in an industry that is as fragmented as Golf is. GolfSmith knows that they are a destination location and that one "loss leader" sale will result in a dozen more vists IN A FEW WEEKS to buy balls, bags, shoes, umbrellas, rain gear, tees, training aids, grips, gloves, training, clothing and on and on.

Lastly, How many times a year do you see your car buying customers?

I rest my case.
Joe
p.s. don't be mad at me, I just enjoy marketing/merchandising so much that I can't help myself sometimes!

I've neglected to comment because I've been really torn on this subject. I'd love to be the foremost spokesman for truth in advertising, I'd love to come in here and say our OEM's are spear-heading change, I'd love to talk about a few of the retailers in the car industry (retailers - not car people) who try to operate like Golfsmith, and I'd love to say I believe everything on CNN too.

The truth is reality is a mean bitch. Just as I post this, two of our Hyundai ads are expiring. We advertised a Sonata for $16,777 out the door with all VA taxes and fees included, and had over 30 to choose from at that price - it failed. On the other hand, the Hyundai Santa Fe ad for "up to $6,000 off" worked like a charm. When I see an OEM ad it is always for the base car they produce the least of (the one we can't order) without freight and some other stipulations. CSI takes a long time to pay the bills, and it starts in your service department. I can go on and on...

A while back I posted a comment about the changes going on in this industry and said the current economic situation will either speed those changes up or halt them in their tracks. This is what I think will happen over the next 2 years if the economy stays like it is right now: Every manufacturer has acknowledged there are going to be less cars sold in the US this year. Those same manufacturers then said, "yes, there are going to be X million less cars sold in 2008, but we have the new XX model coming out so we'll still increase our sales this year! Keep those plants pumping those cars out because when the new XX model hits our older cars will start moving again." They'll hold onto this notion through April or May, then realize they made a big mistake, fire some people, and the new bosses will then come on board saying "the only way we can move this stuff is to put bigger incentives out than ever before" and this summer we'll start selling more cars again based on huge incentives. Trades will be worth less down the road, crazy leasing residuals or longer financing options will be introduced, and the cycle will continue. We'll continue doing what America does best: putting things on the back-burner.

I hope I'm wrong.

I dunno, I guess I like to think each customer is a little different and what might appeal to one won't appeal to another. Lucky for the consumer they have about 1 kazillion choices. When I look at my own personal buying habits it seems I like to buy from people that are like me in a way. They might be completely different but they have some way of connecting to me. Most folks are creatures of habit and like to do things in a pattern, I attended Ford training back in the late 90's and they use to suggest Mirror and Match the folks your speaking with, (meaning adjust to the speed and go at their pace), I thought it made sense? My point would be, I think consumers want somebody compatible with them and its our job to figure out what that might be and keep it flowing within a general buying process that treats them with respect. I know not all customers will go along with our process(or any process for that matter) and after trying to adjust it to their style it still doesn't work for that one customer, sometimes you have to chalk it up to a learning experience and get back to the other 90%.
@the marketing ethics group
tell the manufactures to stop first, I think I know where the Dealers learned it. (and it wasn't from the G-Pod) Ha ha I made funny <

What consumers want is:

1. Their color, options, in stock, forget dealer trade, too long.
2. Invoice pricing from first quote request
3. The quickest transaction time possible
4. 0% interest

Cars have become commoditized, zero percent has become expected, invoice pricing is available to everyone all the time. If you can't give this to them, chances are someone else will, it's only a couple more calls away.

As a consumer, Joe and Joey's comments are why I would not purchase from them.

And, I would not call Joe a liar either. As I said before, I think he is a hugely intelligent person, with some great ideas.

If it seems I am being a bit combative over the golf store/car dealership comparison, it is only because I have been making the comparisons in my head since my visit last weekend, and this thread gave me the perfect avenue for venting.

Keep up the good work Joe, Shaun, and everyone else!

Joe,

You were the one who first drew the comparison to sporting goods stores, I just tried to share the difference between honest advertising and what I feel is dishonest, intentionally deceptive advertising.

You are absolutely right, "Golf Galaxy" (it was Golfsmith, in case anybody is wondering) does not face those same challenges. But how does a loss-leader ad address any of those issues in our business? If all else is equal, I would rather be forthright and transparent in my advertising/marketing efforts.

And by the way, speaking of buying experiences, I got a THOROUGH product presentation and demonstration/"test-drive," by a commissioned salesperson, who asked qualifying questions like "what's your handicap?" "can you describe your typical ball-flight?" "what is more important to you, distance or accuracy off the tee?" etc. He tailored his presentation in response to my answers. After my test-drive he closed me by asking "do you need new spikes for the season, or just the club today?" I almost fell over. He then explained their financing options, including a no payments/zero-interest til 2009 program. He asked whether I had any old equipment I wanted to trade in, then explained how their trade-in program worked, in case I wanted to take advantage of it next season and get a new driver again (gotta have the latest technology, you know?!?!??!). He showed me their club repair/customization department, just in case. He explained the manufacturer's warranty, and the store's return/exchange policies. When he learned I was in business for myself, he made sure to tell me all about their "business solutions" program. All told, he spent well over an hour with me, for what I can only assume was a pretty measly commission on one golf club.

How many of the customers at your dealership get this kind of service? If it's a lot of them, great job!!! If yours is more representative of the norm, customers are probably still getting the old "if I could, would ya?" buying experience. It's time to stop blaming the customers for our woes. The argument that "customers only try to negotiate for cars" is our own fault!!! Until the whole Monroney debacle, autos were the only consumer product that could get away with not carrying a price tag! And we wonder why customers don't trust us? Customers upside down? Whose fault is that? Our need to sell 17 million new cars a year has driven us to deceptively low price advertising, incentivizing customers to trade more often than they ever have before. Need to sell more cars? Just find a bank that will do 96 month loans, don't worry, none of your customers will be upside down when they want to trade in 3 years. Shaun had it right, the car buying process is an emotional process, but our advertising and sales processes evoke the wrong emotions.

No worries Shaun. Everyone knows that your a square shooter!

Clarification:
I'm not calling Joe a liar or saying that he supports lying. While we may see some things differently, I sincerely respect his thoughts and opinions.

Amen Joey.

Sorry, but does anybody really care about what the consumer wants as long as we sell the car and make the money? This CSI stuff is so over rated. The Factory makes a big deal about it, but they really don't care. It is all lip service to them. They just use the CSI as leverage to hold over a dealer, but it is not because they really care.

The consumer cares about price, getting in and getting out, they don't want to be your friend, sorry. Believe me, they will gladly go to lowest dealer and give two cents about their buying experience. How many of them even remember their sales reps name a week after they buy the car? Not many to be sure.

Some State's and the Fed's for sure have dealer's so regulated that it is very hard for a dealer to pull the kinky stuff they did back in the day. If they do kink it they eventually will get caught and they either get fined, suspended, or lose their license. Granted, there are several state's that have absolutely no regulation and it is still the wild west and the factory is the only one regulating the dealer. In any case, the factory calls at the end of the month for your sales numbers, not your CSI.

All this hog wash about the "Buying Experience", la dee da, stuff is for the birds. Get 'em, get 'em out, make as much gross as you can, and move to the next deal. Face it, they don't give to shakes about me, what a nice guy I am, or how community oriented my dealer is. How many times have you been the nice guy, broke your tale bone to give "Completely Satisfied" service and they blow you off for $50.00 to your competition across town. Oh, but I had better service and they still didn't buy from me........waa waa.

This doesn't mean you have to lie to them, cheat, steal, kink, badger, be mean, be insulting, etc...It just means get 'em, and get 'em out. I guarantee your CSI will go up 100% if you cut their time in the store in half. No back and forth four square Olympics, no hold them in the box forever squeezing them for every cent.

Sorry, but it's car business, not car friends.

Note to all,
Under no circumstances do I support LYING. Because I don't take the pollyanna view point, does it mean I support lying.

Let's look at "what a customer wants..." by comparing Tim Morris's visit to Golf Galaxy to buying a car.

do we go to Golf Galaxy and negotiate? What? no one going there even tries to negotiate? That'll be the day at a dealership.

Did you get a low trade-in price on your old clubs? Were you pissed when you found that you owed more on your old clubs than the trade-in offer? What? A straight deal? No upside down trade?

Did you get the color of your golf clubs that your wife wanted? What? They only come in one color?

Did they stock the golf club with that exciting options upgrade package that your pal has? What? There are only a few shaft flex options?

We make comparisions to other industries and think it'll translate to car sales.

If cars were CHEAP like golf clubs then dealers would stock every damn option/color group... just like Golf Galaxy does.

Joe

Joe,

To answer your question (which I assume was rhetorical), I have spent time outside of the car business. While I appreciate your honest comments, I respectfully disagree with your industry comparisons. I know that any marketing effort with a chance must be creative, compelling and convincing to attract buyers, but the car business has in many ways become proud of justifying the art of lying.

You may be sick and tired of the rap this industry gets and you may believe the old days are gone, but being a self-admitted marketing bastard responsible for cooking up the luring schemes contributes to the rap the industry gets and keeps the old days very much alive.

Last, but not least... no need to say sorry. We're all big kids and I really appreciate your points of view. I don't believe you meant any offense and even if you did, none taken.

To all,

So... what do consumers really want in a car buying experience?

I am not a marketing person. But I have bought a car before and I disagree with Joe. I am a twenty-something web consultant (which means I know everything, right?), so here's my take on it.

Auto sellers—like real estate agents—depend heavily on information-asymmetry; their value and advantage is that they (used to) have more information than the buyer. They know about all the cars and they know the bottom line of what the car is worth. The car that they are selling is no different from the car down the road, so the only value they provide is the information.

Shopping for cars is one of the most anxiety-producing experiences I've had. In Joe's words, I feel like they're using their "underhanded schemes" to try to lure me into buying anything. I will avoid sales people at all costs, I know I'm not alone in this.

As a result, I do most of my shopping and research online. I'll read reviews to figure out what I want to buy, and then search around to find a good deal. Since the sales person no longer provides any value in this transaction, I will buy it online if I can.

If I can't, then I'll walk into a dealership armed with all the information I need. If I can't get a fair price, I'll find someone that can give it to me. Note that I say "fair" price; I'm not looking for bottom dollar but more importantly best value, which includes the experience.

So, how do dealers appeal to a person like me?

1) convince me that I can trust you. This means throwing out all your schemes and trickery and being honest with me. This may even involve acknowledging that you're not willing to sell it cheaper than what I could get it elsewhere. So how do you compete?

2) Give me some other tangible value for free, like service. If I trust you, and you can give me something that no one else is offering, I am willing to pay more for it. You need to differentiate yourself from the other guy that's trying to con me on the same product.

Joe,

Sorry, but I need to get Shaun's back on this one. With the (possible) exception of the travel industry, I can't think of another business that advertises using loss leaders the same way we do in this business. Come on, Supermarkets? Sporting goods stores? When my supermarket chain advertises Ribeyes at $7.99/lb, I don't get the butcher coming out to tell me "those particular steaks have been sold, but follow me, we have some steaks just like them with some additional equipment!" Last week when I bought a new Driver (spring is coming, almost time to get back on the course!!!) at Golfsmith, I went looking specifically for a particular model I saw advertised in their Sunday paper insert. Guess what? Every single club was priced exactly as the ad said they would be ($299, a hundred bucks off, great deal!!!). Thinking like a consumer for a moment, I would be really pissed if I had gone in there and been told that the ad only applied to one particular stock number, I just missed the fine print.

These types of businesses don't use the "loss leader" in the same way. When they do use loss leaders, they do so in order to drive sales of other profitable products, i.e. eggs and milk may be advertised and sold at a loss in order to sell more ribeyes to those same shoppers. A certain golf club may be advertised at a loss in order to sell a dozen golf balls to every buyer as well. I think what Shaun is referring to is the shady business practice of "only one at this price" advertising.

Using the argument that "Consumers have all of the information tools needed to chart their own course, they can take control of their own fate" only makes it more shameful that some (read: almost all) dealers still try to use this type of trickery to seduce customers. And we wonder why they don't trust us. They have all the information available and we still insult them with our dishonest ads. Why don't we just be honest with our customers? I know, I know...because the dealer down the road is advertising pickups at $12,988...so we have to!!!

You can come up with better than that for your marketing efforts, Joe. We have all been familiar for quite a while now with your level of intelligence, you are an impressive guy with a lot of great ideas. Loss leader advertising is beneath you.

Now, back to Shaun's original question: what do consumers want in a car buying experience? I think they want an honest, open, transparent, non-confrontational process. If I were buying a car today, I would want the freedom to compare makes, models, and options in order to further educate myself. I would want a sales consultant who is familiar with the product and his/her own dealership, who can display legitimate reasons to do business there. Next, I would want a transparent pricing/trade discussion. By transparent I mean a process that is easy to understand, shows me the dealer has nothing to hide, and doesn't insult me by assuming I have not done my research. Next, I want an honest financing discussion, and as an educated consumer, I understand that the financial aspect all boils down to arithmetic, so please don't try to juggle numbers...otherwise I will feel like their is something hidden. After that, just give me a clean car with a full tank of gas.

Tim

I agree with Joe, the consumer is armed and full of information (no duh) but I recently shopped as a consumer. I was more educated than any of the sales people I talked to. They didn't know about the product well enough and especially how to combine options and equipment packages. Why?

Little money is left over for the car dealer = less quality sales people = poor buying experience. They were nice guys in my recent experience but not knowledgeable enough.

In my opinion a customer wants to make sure he gets a good deal and that a neighbor doesn't tell him what a fool he is because he could have gotten a better deal. Help them make a good decision, help them with questions and give them a fair deal. It wasn't about a couple hundred dollars for me. It was about the confidence of shopping with an advisor/ consultant to my automobile purchase.

Let's not kid ourselves here. Joe's comments are dead on. We are forced by the virtue of our the basics of our business to create hype (ala King of Cars) to create a circus-like level of excitement with customers. Newspaper ads for 1/2 off new cars, ultra-low purchase prices, payments so low no one could qualify for are all the same. They are created because the customer asks us to. That is the only way to get people into the door is the hope for gain. And it isn't only in our business. As I am looking for a big screen t.v., I find myself scouring Amazon, Cnet and other websites for info and prices on t.v.'s, and realize at some point, the price will drop to a point where the customer service (or product quality) will not be palatable at any price.

As honest as we are with our dealership, we still have customers who ask us to lie to them when they have offers from other dealers who are using rebates with incentivized rates, obscenely high trade values, etc. We refuse to.

If customers want the "game" to stop, they will stop rewarding the unscrupulous handful of dealers who lie to them and buy elsewhere. If, on the other hand, your advertising WORKS, and it is accurate (the disclosure is thorough, the vehicle is/was actually available, etc.) then we have done our job. Like Nike always said, "Just Do it!"

I am a marketing director and newbie in the auto industry (4years). Prior to this I have been self-employed for decades so I understand Darwin's rules of financial survival. I am the PERFECT outsider to address this question.

Shaun Raines writes:
>>>Can you say loss-leaders? Can you say trickery, manipulation, coercion?

Most car buyers are afraid that they will not get a "good deal" on their new car. Why? Most everything else they purchase in life has a set price, there is no negotiation, and they can usually identify that lowest set price with little difficulty if they do some research. When it comes to cars, they feel like they are out of their element (unlike overseas, Americans are not very experienced in "haggling/negotiating"), and are wary of car dealers. They don't know the "cost" of the car, and they know that the MSRP is certainly not the "set" price, so they wonder - "what is a fair price for this car?". They are also afraid to speak to or meet with a dealer as they feel they will subjected to high-pressure sales tactics. Ultimately - I believe the consumer wants to know that they are getting a fair deal with superior service that respects their needs and desires. Our challenge is in how to successfully (and consistently) meet those needs while being realistic about what actually works in the demanding auto sales environment. Kevin Frye/eCommerce Director/Jeff Wyler Automotive Family

is he gPod still available?

Is the gPod still available?

Isn't it nice how Jeff has created this site for us all to enjoy, learn from and prosper... and along comes this twirp named Tre... who steps in his own poop. Lovely!

Yeah definitely read who moved my cheese.

See, you can do video! Good job man it looked great. I'm goin to have to get the gPod!