This is free marketing research on the Automobile industry and can include information on the background, market structure, definitions, competitors, trends and developments of automobiles and is related to other topics such as cars, trucks, vans, motorcycles and vehicles.

[edit] First Time Buyers Deserve Special Consideration

To say the least, it is an immense challenge to influence car and truck buyers overall, let alone those coming into the market for the first time. Part of the dilemma relates to effectively communicating relevancy and value to someone who is examining this category with little or no serious experience. Whether it is a new or used vehicle, the list of considerations can be overwhelming before a vehicle selection is made. From a reach strategy, traditional media does not always support the needs of automotive marketers. Alternatively, special efforts are given to target FTBs and those influencing this audience through large-scale auto shows, clinics and test drive events. As an example, in January 2006, both Los Angeles and Detroit will host internationally-monitored auto shows which will reveal many new production and concept vehicles for consideration to the public. Additionally, the annual Specialty Equipment Market Association (SEMA) show in Las Vegas highlights accessorized vehicles and their components, with the goal of showcasing how a vehicle’s look and/or overall performance can be enhanced. Each of these venues, while addressing the market overall, are also designed to intercept young buyers in order to influence their subsequent purchase decisions.

One timely example of possibly hitting the FTB audience at the right moment relates to a popular small car model. At the time of this writing, the newly redesigned Honda Civic was named as one of the top three vote-getters for the 2006 North American Car of the Year Award1 . Ideally, such an award, if ultimately achieved, will heighten the consideration for this model among a coveted group of buyers. For those between the ages of 18 to 24, the Honda Civic and other comparable models fall into the “segment of choice” for this young group. With an average of 25 percent of all new registrations among 18 – 24 year olds coming from the small car category2 , this type of public attention can help break through to a very desirable audience.

When first time buyers enter the marketplace, the realities of the transaction and cost of ownership must be balanced against the “dream cars” they’ve typically imagined themselves driving. Choices must be addressed and balanced by a series of pragmatic questions, such as:

• How will I finance the vehicle and what will be the monthly payments?

• Will my family help reduce the cost?

• What are my financing options?

• Will I get the car or truck I really want?

• How will the cost of accessories, insurance and other factors, like the price of gasoline, affect my budget?

It is safe to say that some or all of these issues pose a daunting challenge for a brand new buyer. It’s equally daunting to automakers, dealers, finance companies, and media organizations, among others, who wish to better understand if they can effectively serve such a prospect.

In this study, readers are given recent views among 366 U.S. consumers between the ages of 18 and 30 who were first time buyers or lessees of a new or used vehicle in the past two years (since October 2003). Market insights in this study come from an Internet-based public opinion poll conducted by the Polk Center for Automotive Studies during November 4-10, 2005.

[edit] Information Gathering

Less than a generation ago, searching for automotive information focused primarily on media sources such as newspapers, print advertisements, radio, and television. Potential customers also relied on word-of-mouth and advice from peers and family, as well as surveying vehicles at the local dealerships.

No doubt, these avenues are still leveraged today. However, over the past decade the information landscape has changed dramatically with a growing access and understanding of the Internet. Today, a wealth of vehicle-related websites, message boards, review sites, chat rooms, and “blogs” are available at the touch of a fingertip. According to the U.S. Census Bureau, the percentage of U.S. households with a computer and Internet access has increased from 18.0 percent in 1997 to 54.7 percent in 20033 . According to other published estimates, some say over 60 percent of the U.S. households use the web4 . With time being finite, using the Internet as an information provider has replaced personal time that was once allocated toward traditional media.

For those addressed in this study, participants were asked about the importance of various sources of information during their decision to buy their first vehicle. As depicted in Figure 1, results show that 35 percent of respondents consider the Internet to be the most important source of information: a higher percentage than is attributed to television, radio, newspaper, and magazines combined. With a relatively young, technology-savvy segment in this cohort giving such a high priority to the Internet, this finding continues to challenge conventional media outlets that have been in place for decades.

From a regional view, almost half of the respondents in the Western5 region of the U.S. (45%) pointed to the Internet as a very important source of information, the only region higher than the national average (35.3%). Supporting this finding, according to the U.S. Census Bureau’s (USCB) report on computer and Internet usage, the Western region of the country has the highest percentage of homes with computers and Internet access.

Additional findings from this current study show that FTBs with a higher level of education and income are more likely to mention the Internet as a “very important” source. However, marketers should not assume that lesser educated individuals or those with lower incomes prefer to avoid the Internet as their top informational source. It is wise to realize that those with access to it tend to use it. So with availability and usage of technology in mind, the opportunities to capitalize on alternative media are equally important to all strata of first time buyers.

[edit] Family Influence

While over one-third of respondents say that the Internet is the most important source of information when making decisions about their first vehicle, this is rivaled by the influence of friends and family. As shown in Figure 1, a combined 38 percent consider recommendations by their parents (24.9%) and friends (13.4%) to be the most important source. So while respondents in this study may belong to the much discussed “Gen Y” target, which embodies a group who prides itself on independence and being on the cutting edge of what’s new, do not assume the immunity of their influence from trusted relationships. This has two implications: (1) word-of-mouth strategies will still matter to an independent, tech-oriented audience, and (2) communication strategies which build trust among family members about a vehicle (and related investment requirements), should be prioritized.

[edit] Reasons for Market Entry

Not only is information passed readily between the household generations, but so are the cars and trucks themselves. As shown in Figure 2, over one in four (26.2%) entering the market to acquire their first car is doing so because a handme-down vehicle would no longer operate. This implies quality and durability messages have the opportunity to also resonate with a younger audience, and not just with an experienced buyer base. To automakers, a point in loyalty gained because a reliable vehicle kept a customer in the brand is worth multiple millions of dollars.

Earlier impact analyses by Polk indicate the collection of all Domestic makes gain roughly $1.1 billion in revenue for every point in loyalty gained. For the aggregate of all European makes, it is an incremental $141 million gained and for Asian makes, the windfall is another $571 million. Worth noting in Figure 2, nearly one in five (19.4%) of all responding first time buyers indicate they acquired a vehicle simply because “it was just time” based on them becoming of driving age. And among respondents age 18 to 21 years old, over forty percent (41.8%) state it as their top reason for entering the market. In contrast, only 15 percent of those between the ages of 22 and 30 years old indicate it as their main reason for buying. This finding reaffirms the need for demographers and market planners to track aging youth. As individuals are able to legally drive, this fact appears to tie closely to the “need” for a new or used vehicle. This implies that turning of driving age can still be a predictable, albeit unsophisticated, way to reach this target.

[edit] Influencing Factors

Given a first time buyer identifies their need to enter the market, what are some of the issues they consider in making their first purchase? Respondents were asked to identify the importance of several items as they made their initial buy. Several factors related to economics and personal services were addressed and are summarized in Figure 3.

Results show two understandable dynamics at play: how much one will pay (on a monthly basis) and how well one is treated. For FTBs, the financial issue tops the list as being more important than the dealer experience, yet the latter should not be neglected, especially given the number of future “buying years” possessed among this segment.

Ironically, despite the earlier mention of parental influence on FTBs as solid sources of information, over half (54.1%) indicate where their parents bought in the past is “not at all important” to them (i.e., only 6.8% said this is a “very important” consideration). This hints at some limits to the extent which families may control or influence the total purchase process.

[edit] Mindset Based on U.S. Regions

This is a look at high different regions of FTBs approach the buying process.

[edit] How to Market to The First Time Car Buyer:

• Blend a mix of “interactive opinion leaders” into an overall communication strategy. Taking cue from the reliance on the Internet as well as parents/friends, use this to justify how a message framework could be developed. As has been done by some automakers, leverage how FTBs, especially those associated with the Gen Y audience, will respond to interactive offerings which present iconic or cultural leaders in the medium. As many youth-oriented automotive brands build a “grass roots” presence with event marketing, it is also important to look for ways to appeal to the tech-savvy side of these buyers who want validation through thought leadership that they can identify with in an easy manner. As revealed by earlier findings, FTBs “want what they want” and being able to visualize themselves into successful buying scenarios is important.

• Consider creating a “voice of the family” when speaking to this audience. For example, allowing print media to depict the concerns of parents to their independent and maturing children” may appeal to FTBs whom still respect family values and the advice of others who have been through the vehicle buying process.

• Think twice if communication strategies to reach FTBs exclude interactive or online approaches in a media plan. While a seemingly obvious point, it is easy to sometimes get caught in the trap of relying on traditional media (e.g., radio, newspaper) because it is what has been used so often for a given automotive nameplate or related demographic. This has implications to dealer marketing efforts which have not invested yet in such strategies. For the first time buyer, it appears an online communication outlet is a “must have” component to effectively reach them. Again, think about how they search and what they value.

[edit] Dealer Communities

• As seen in other market studies, the interaction with the dealer plays an important role on future business and referrals. Don’t neglect the amount of preparation that this ambitious and independent audience may have done prior to entering the showroom.

• “Loyalty does not exist.” In one sense, it is wise to assume that this may be true for FTBs when they return a second time in later years. Overall brand loyalty, let alone loyalty to an automotive retailer, can be a dream when counting on business from young buyers. As noted earlier, FTBs give little regard for where their parents bought a vehicle, so do not assume younger offspring or relations to a more mature buyer base will come to the same showroom as their elders.

For more information and the complete study, visit Polk

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