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Is Pricing a Strategy or just a Tactic?

ed.brooks

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Jan 15, 2010
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Recently I was involved in a discussion on Twitter. I was taken aback at the phrase pricing is just a tactic. Twitter is a tough place to have an in-depth discussion, so I wanted to ask the DealerRefresh community for your thoughts.

My belief is that pricing can and should be an integral part of a modern automotive marketing strategy, but it could also be just a tactic. The right price on the right car can certainly drive traffic. By right price I don't mean the cheapest, but rather a well-researched, competitive price. It becomes much more than just a tactic when a dealer leverages the transparency of the Internet to justify and hold their asking price by showing customers how their cars pricing fits into the market.

A more Old School approach would be to use price to Just get'em in. The next steps for an Old School dealer would be switching the customer to another car and working hard to drive up the gross. In this case price is just a tactic and one almost guaranteed to perpetuate all the well-worn car dealer stereotypes.

What do you folks think? Should pricing be an important part of your strategy or just a tactic?
 
Pricing cannot be merely a tactic nowadays. Like you said:

Pricing "becomes much more than just a tactic when a dealer leverages the transparency of the Internet to justify and hold their asking price by showing customers how their car’s pricing fits into the market.

Price your vehicles appropriately, show your customers why its that way, and explain why its worth paying $100 more to buy the car at your organization.
 
Pricing is a philosophy, a core, a method, a characterization and it fuels your local reputation. Sure, you can call it a tactic as well, but I would prefer to talk about pricing tactics and not categorizing pricing into the bag of "tactics." It is so much more than that. It is a definition.

Larry Bruce :rolleyes:
 
...but seriously did Larry say that?
Just another thing to add to the long list of stuff said by Internet Experts whose understanding of the Internet is vastly different than my own. My favorite bit of advice touted by this group is, "Don't put your cars up on the classified sites right away. Give yourself a few weeks or a month to make the big gross."

That there is a market for this advice shouldn't surprise me; change is hard and the Internet has most certainly changed our business. This group of advisers gives comfort to management by saying that the old school ways still work. It's much easier to have conversations about SEO VS SEM, landing pages, microsites and split testing, than it is to have conversations about profound changes require that attention at every level of the dealership. By following this advice, management continues to operate as they always have, while anything internet-related is assigned to "The Internet Department".

I too used to think that the Internet didn't really change the process, only where we advertised. I now realize that the balance of power (knowledge) has shifted dramatically between the dealer and customer. It presents a new array of challenges, but also tremendous opportunities for those that really embrace and understand the changes.
 
This group of advisers gives comfort to management by saying that the old school ways still work. It's much easier to have conversations about SEO VS SEM, landing pages, microsites and split testing, than it is to have conversations about profound changes require that attention at every level of the dealership. By following this advice, management continues to operate as they always have, while anything internet-related is assigned to "The Internet Department".

Your timing on this statement couldn't be better Ed. I just got done having breakfast with one of the largest dealers in the nation. We were discussing this exact topic as it relates to GM's who are afraid to change. You've added a new twist to that conversation with the "consultants/advisers" who weasel their way into a dealership by leeching off of the "old school."

Fortunately, I have seen so many dealers move away from the old school mindset and those old school GM's are either converting or leaving. I can tell you the big shake-up is coming for Toyota stores. I liken Toyota to Microsoft right this minute. The world was theirs and the executives got comfortable. Microsoft thought they crushed that little Apple company, but Apple came back and built the same software (operating systems) a lot better. Are we seeing some of the same in the car industry?

It has amazed me how complacent some of the Toyota GM's I've met lately (and some I've known for years) are. While Hyundai and Ford GM's are embracing CRM, digitally-targeted marketing, and up-front pricing some old school Toyota GM's are still working with their same old marketing reps who are pushing untargeted broadcast messages. Speaking of those same old marketing reps, how many different companies have they now been recycled through?

I'm probably stepping out of bounds here, but I'm going to say it (because I'm not fully caffeinated yet)....

  • if you are a GM who still pushes all your marketing through an ad agency...
  • if you are a GM who let's the "Internet department" run unchecked...
  • if you are a GM who thinks targeted marketing is sending an email blast...
  • if you are a GM who spends more time walking the lot than looking at your cars online...
  • if you are a GM who does not log into your CRM hourly...
  • if you are a GM who still yells in Saturday morning meetings...

YOUR DAYS ARE NUMBERED.

With that said, there are people who want to help you acclimate to "digital." Many of us are here on DealerRefresh and do not ask for anything in return but to see you understand and appreciate a change. Our advice is free.
 
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I'm probably stepping out of bounds here, but I'm going to say it (because I'm not fully caffeinated yet)....

  • if you are a GM who still pushes all your marketing through an ad agency...
  • if you are a GM who let's the "Internet department" run unchecked...
  • if you are a GM who thinks targeted marketing is sending an email blast...
  • if you are a GM who spends more time walking the lot than looking at your cars online...
  • if you are a GM who does not log into your CRM hourly...
  • if you are a GM who still yells in Saturday morning meetings...

YOUR DAYS ARE NUMBERED.

With that said, there are people who want to help you acclimate to "digital." Many of us are here on DealerRefresh and do not ask for anything in return but to see you understand and appreciate a change. Our advice is free.

We have been involved with the Internet for a decade. Just visit AutoTrader and do a search for any core product and it becomes obvious that most dealers just don't get it. We have found the most efficient, cost effective, way to reach customers and dealerships are cutting back on Internet related expenses. As this continues, it just makes it more profitable for the rest.