There are some big differences between marketing, merchandising and advertising.
Marketing is basically the “positioning” of a dealership or a brand within a trade area and in the minds of that area's customer base.
Marketing is expensive. Because of that, marketing and branding usually is done by auto makers.
In some cases, large dealerships or dealership groups engage in brand marketing. But most U.S. dealership budgets aren't big enough for such efforts.
Merchandising, on the other hand, is the act of setting up the inventory display, creating an attention-getting environment and affecting the moods or attitudes of both customers and employees.
Atmosphere affects attitude. Prospects like to shop at businesses where there seems to be something going on.
Merchandising encompasses everything that has an impact on the senses: sight, sound, feel and even the senses of taste and smell.
Probably the best merchandiser in the car business is CarMax. Everything they do has some form of message that is “communicated” through their facilities, their inventory and point-of-purchase materials.
Meanwhile, advertising is more related to a specific action. It has a deadline and a “call to action.”
Marketing basically is too expensive for a fair payback to the franchised dealer's pre-owned department.
Advertising is expensive, but necessary for the franchised dealer pre-owned department.
Merchandising is possibly the most effective and cheapest. Yet most franchised dealership's pre-owned departments overlook it.
When you look at the pre-owned industry in general, the franchised dealer is the only one of the three segments that really concentrates on marketing and advertising.
The independent dealer body does some advertising, but not much. They tend to rely more on on-lot merchandising and the cosmetic reconditioning of their inventory.
On the surface, this is effective, in that they have controlled 32% of all pre-owned sales for at least the last 15 years.
The average franchised dealer sells 57 units per month and the average independent dealer sells about 32 units per month with minimal investment in facilities, people, inventory and advertising.
When you begin thinking through what type of advertising makes the most sense, you likely will return to available dollars vs. the floor traffic generated.
For many years, the best return on the dollar in the pre-owned arena has been the classified liner ad.
One reason for this is that all three market segments — franchised dealer, independent dealer and private parties — all advertise here. So, all three market intenders tend to “shop” here.
A liner ad should have enough information to get the shopper's attention and include a phone number and a URL for the dealership's website.
The impact of the Internet cannot be over emphasized. It has changed the advertising agency landscape and the media consumption habits of advertisers and continues to do so. A study indicates that seven out of 10 automotive Internet users either purchased a unit found on-line or intend to.
Dealers today who are serious about the business have active and robust Internet departments for their new-vehicle departments. But many of them don't have active pre-owned Internet departments.
When running classified liner ads, check with your newspaper and find out if they have an electronic or digital version of their paper where you also get an electronic classified liner ad.
Many of the smaller market papers don't offer this, but many have a relationship with either Cars.com or AutoTrader.com whereby you get a “free” listing, or can get a reduced cost on listing your vehicles on their sites.
Ed Curry is director of pre-owned operations for NCM in-house training and consulting. He can be reached at [email protected].
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