According to a Business Week article this week, there is a clear split between age and brand choices within the auto industry. American car companies dominate the market of customers over age 60 (not surprising), while foreign automakers are preferred by customers under age 40 (again, not surprising). That's a big problem for American car manufacturers.
The earlier a car company can attract a customer and develop a relationship between the brand and that customer, the better. The goal for car manufacturers is to gain young customers and then retain them. Hopefully, those young customers will develop a loyalty to the brand and continue to buy that brand in the future, or better yet, they might trade up to a more expensive brand within the company's umbrella of brands in the future.
We all know it's easier to keep an existing customer than it is to find a new one, so a strong customer retention focus makes sense for car companies, too. It looks like Ford (NYSE: F), General Motors (NYSE: GM) and Chrysler have a lot of work to do if they want to capture a younger demographic.
Ford, General Motors and Chrysler have been steadily losing market share to European, German and Japanese automakers. Year-to-date through September, the three American car companies hold just a 51.2% market share. That's down from 54.1% one year ago and 63.2% five years ago.
Research conducted by Strategic Vision shows that younger car buyers are most interested in price, fuel economy and "fun to drive" attributes. Can American car manufacturers meet those three demands from younger customers and steal back some market share from foreign automakers? That remains to be seen, but let's hope they can before it's too late. It seems that Ford, General Motors and Chrysler need to make significant changes not just to their cars but also to their marketing strategies, including a complete repositioning of their brands.
Reaching the younger demographic is another issue for American car manufacturers. Can Ford, General Motors and Chrysler leverage social media marketing to attract younger car buyers? I guess we'll find out. Of course, they also need to build a product of superior quality to foreign cars. We'll have to wait and see if they can do that, too.
What do you think? Can American car manufacturers save themselves?
Good point Susan about brand loyalty. In politics, politicians benefit from this same concept and is probably one of the big things that keep incumbents in power and helps kin and jr.'s get elected.
Similarly, the problem about reaching a younger demographic is a problem shared by politicians and political operatives alike who are trying to figure out how to get them to vote and how to best appeal to them.
JX
Posted by: John Xavier | October 30, 2007 12:53 PM | Permalink to Comment