Automotive Marketing Analytics

Econometric modeling has taken Automotive Marketing Research & Branding to new levels making it easier to accomplish objectives like

• Measuring the ROI on Marketing tactics

• Identifying key consumer segments

• Measuring dealer level marketing effectiveness

Successful Automotive Marketing Analytics integrate marketing and brand metrics to provide an ROI perspective on the entire Purchase Funnel, allowing marketers to optimize sales and branding goals, rather than sales goals alone.

Brand Marketing Strategy by Size Segment

Lack of Differentiation Leads to Sub-Optimal Results- differentiate your marketing strategy, not only by consumer segments, but also by product segment and channel. Academic research suggests that the degree of the competition in the Auto market is not uniform and is more segment-driven than brand driven. One research study suggests that competition is fiercer in the mini and sub compact segments and much lesser intensity of competition in the larger size segments[1]. This is partly driven by a greater volatility in market-shares in the smaller size segments and also a function of the fact that smaller car segments have a greater proportion of first-time or less seasoned buyers that are lesser brand loyal and more prone to brand-switching. The above referenced study also ascribes greater competition in smaller segments to the greater focus of Japanese Auto-makers in the smaller car segment, which motivates domestic Auto-makers to be more aggressive to stem market-share erosion. With the upward trend of Gas prices, more and more consumers are moving away from large cars to smaller car segment, so it is critical to get a good handle of market dynamics and marketing strategy in this segment- having the same marketing, media and channel strategy across all product groups within your portfolio is not only sub-optimal but is also risky to the equity of your brand.

Brand Choice Analysis

Nested Logit Model Analysis can be performed on survey or purchase data to understand what factors drive consumers to choose between different brands.

Dealership Marketing Strategy by Trade Area Demographics & Competitive Characteristics

 Dealership Advertising activities drive sales at a more local level and consumers are extremely diverse at a local level, with geographic clusters determined on the basis of income, culture, ethnicity, education, life stage and other demographic characteristics. In addition, effectiveness of Dealer Advertising activities is also determined by the degree of competitive intensity within the Dealer’s Trade Area. As the level of competitive intensity increases within the Trade Area, an individual Dealer’s Share of Voice diminishes, adversely affecting marketing effectiveness. In such a situation it becomes critical to identify your target segment within each Dealership Trade Area and measure what marketing tactics and media strategy they best respond to and accordingly set your Marketing Communications plan at a local level. Dealer Trade Area can be determined on the basis of your current geographic reach within each Dealership region or by using a geographic radius approach. Trade area metrics can be leveraged to develop optimal trade areas by individual dealerships. Dealer Trade Area Demographics can be used to group dealerships into similar segments that can be used to customize marketing strategy.

The impact of dealer advertising on vehicle sales individually by dealer and across dealer segments help marketers recognize what marketing tactics work better for each dealer/dealer segments. We have a sophisticated approach combining a dealer segmentation approach with Multilevel models. In the first stage dealers are segmented based on trade area demographics into homogenous groups.

In the second stage the contribution of dealer advertising to sales can be modeled using an approach that yields both national level contribution of dealer advertising to sales and contribution by cluster. This helps to determine the optimal level of total dealer advertising budget and at the same time demonstrates how dealer advertising effectiveness differs by different demographic groups of dealer locations. This can not only help existing dealerships fine tune marketing allocations but also help in identifying optimal locations for new dealerships or for relocating under-performing dealerships.

[1]“ Competitive Pricing Behavior in the Auto Market: A Structural Analysis” K. Sudhir, Marketing Science archive Volume 20 ,  Issue 1 (December 2000) Pages: 42 - 60

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