Who sits in the driving seat?

The diffuse nature of car ownership means that manufacturers must find out much more about who their customers are and what they want. By John Clemens

There is not much to choose between one car and another these days. They are similarly priced within their ranges, they are all more or less reliable and offer similar equipment. Yet car manufacturers spent 116m on advertising last year in an attempt to persuade people that this is not the case, that there really is a difference between the Renault Clio, the Nissan Micra and the Vauxhall Corsa.

Advertising plays a crucial role in brand and model choice by building image and promoting real and apparent differences in price and finance. Getting the image of a model right in brand advertising is of course important. But manufacturers also need to carefully target their potential consumers using direct marketing techniques, and for this reason an accurate picture of who their consumers are is essential.

Last year, 851,000 of the ten top models were sold, bought by 3.5 per cent of households. The above-the-line ad spend for these ten models was just less than 150 for each car sold. TV and newspapers were used extensively, demonstrating that mass media advertising is essential to compete effectively in the market, even though the number of buyers in any one year is very small compared with most markets.

Car ownership is highly fragmented. Last year, just one in eight of the 1.5 million Ford Fiestas on the road was bought new. A large proportion of the Fiestas, the UK’s most popular model, are either used cars or form part of company fleets.

For car manufacturers, the diffuse nature of car ownership can cause a headache. The new car buyer is their main advertising target. But although this is the case, particularly in the small car market, all drivers need to be influenced as resale values, and the used-car market for any model, affect new purchases and the speed at which the replacement market moves.

In such a complex market it is essential for manufacturers to understand and know their valuable but numerically small markets.

Chart Two shows the characteristics of Fiesta owners, and the way in which new private buyers differ from all Fiesta drivers. The chart demonstrates the female bias of the Fiesta. About one in ten women drivers owns a Fiesta, compared with one in 30 men drivers. It is by far the most popular women’s car.

This female bias holds true for all Fiestas, though it is much less marked in the new, privately bought Fiesta market. In this sub-group, slightly less than 60 per cent are women, compared with close to 70 per cent of all Fiesta drivers. So despite the female bias, advertising has to take careful account of the male drivers of new, privately bought Fiestas.

In addition, the new privately bought Fiesta attracts the over-65s: about one in three buyers of new Fiestas are over 65, compared with just one in eight of all Fiesta drivers.

This kind of age profile is, of course, not peculiar to Fiestas, it is true for most new private buyers of smaller cars. Many new cars are bought as retirement cars, probably purchased with the cash part of pensioners’ carefully saved pensions. Care again needs to be taken to appeal to this market, at the same time as attracting young used-car buyers of Fiestas.

Financing and price are naturally very relevant in the new private car market. Chart Two shows that new private Fiesta buyers are much more prone to use hire-purchase and personal leasing than the market overall; used-car buyers are more likely to use personal loans.

Personal leasing is now growing for private purchases, and, according to our data, it already accounts for some six per cent of new private Fiesta purchases. Manufacturers need to know what kind of people these are, why they decide to use leasing and how leasing varies by model and by manufacturer.

In addition, more and more models are sold to individuals and not to households. More than one in four car-owning homes now has two cars, and in some market sectors as many as one in ten has three cars.

Chart Three shows this to be true for middle-aged homes, homes in which there are likely to be three or more drivers – two parents and one or two teenagers. Which car is the privately bought one: is it the main car, or is it a company car? Is it the second car, the one used more often by the wife (even these days, when most women work, company cars still tend to be a male preserve), or is it the car bought for all the family to use, a fun vehicle?

This is the ultimate fragmented market, in which small groups of buyers account for very large expenditures. It is a market that can make great use of new forms of marketing, database selling, relationship marketing and one-to-one marketing, where each mailing and offer is geared to an individual’s make-up.

The cars may be more or less the same, but last year’s buyers had 851,000 different reasons for choosing the models they did. Manufacturers need to know exactly what these reasons are.

The research data for this article is derived from The Million Plus Panel operated by Continental Research. It comprises 2.7 million individuals selected from the 7.2 million ICD Lifestyle database and is designed to be fully representative of the UK adult population. This panel is classified by more than 3000 variables related to motoring, leisure, finance and investment, health, media, shopping and the home, and by virtually every demographic.

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