How do you price your new cars?
Dealers are like snowflakes, no two are the same"
-Uncle Joe
I've been in retail for decades. From my seat, pricing strategy is a chess match, there is no one way to win, winners will factor in
'everything'. For instance, if your VW, you can't sit back and wait for shoppers to walk in...
Here are some attributes can influence building a winning pricing strategy.
Franchise’s Influence
- OEM Pricing Persona (e.g. Audi vs Ford)
- OEM's brand position among its competition (e.g. Audi/Subaru is strong, Buick is sucking wind
- OEM's mass marketing profile (e.g. GM carpet bombs vs Suby's subtle messaging)
- OEM Incentives
- OEM's Inventory Complexity (e.g. Honda has a few models, trims & options, Chevrolet has a 100x more)
Marketplace Influences
- Number of In-Franchise competitors
- Dealers share of the total in-Franchise inventory in his marketplace (i.e.. little fish or big fish?)
- Number of off-Franchise competitors that share "common customers" (e.g. Kia/hyundai/toyota/chevy have common customers)
- Dealers share of total inventory in his "common customer" marketplace
Dealer’s Direct Influence:
- Dealers Sales Goals (passive or aggressive)
- Dealer’s Management Methods
- A pricing strategy has to complement the current leadership's needs.
- Management quality (leaders or fire fighters?)
- Inventory Performance Sensitivity (rules based or reactive?)
- Age driven?
- Turns driven?
- Marketplace driven?
- Dealer’s local market impact (i.e. little fish or big fish?) This includes
- # of roofs
- The franchise profile (a volume brand or elite?)
- Your franchise's market share of it's brand (are they #1 or last place?)
- Dealer's Inventory Profile
- Inventory size (width and depth)
- e.g. Inventory Dupes creates 'door buster' pricing tactics (e.g. longo toyota has 77 Black Camry’s)
- Inventory Scarcity (i.e. rare vehicles)
- Inventory health
- Product mix optimized?
- Product merchandising
- New/Used ratio (used inventory changes shopper demos)
- Frequency of price changes
- Dealer's Online Reputation (review scores & volume)
Geo Profile
- Rural, Suburb, City (population density & demographics)
- Drive time to market center
- Avg distance to sale (from sales history)
- Marketing Footprint: Serve a single market or multiple markets
Advertiser Profile
All of the attributes above will be reflected in the dealer's ad profile. Some Dealers (& OEM) are big traditional ad spenders. This 'ad posture' will influence (& compliment) the pricing strategy.
Traditional Ads, is the dealer a...
- Carpet Bomber? (big spender)
- Drop in the ocean? (little spender)
A carpet bomber's "ad theme of the month" will have a big voice in the pricing strategy.
The smaller dealer with a opportunistic mindset will be like a sniper and study the weaknesses of his "carpet bombing competitor".
Digital Ad Spend
- Dealer's that rely heavily on the digital audience will entertain sophisticated (or dynamic) pricing models.
