Kathleen Schmatz, executive vice-president of the U.S. Automotive Aftermarket Industry Association, and veteran of automotive aftermarket publishing in the U.S., says that brand equity is of tremendous importance to the aftermarket.
"The automotive aftermarket history is really the history of brands. There are four things that have to occur before a brand is successful," she told attendees of the Canadian Automotive Aftermarket Forum, hosted by the Automtoive Industries Association of Canada.
"A brand is a promise," said Schmatz. "It warrants that a product or service carrying a brand will live up to its ‘Name.’ It is not a trademark, a slogan, or an ad program. Brands are highly compressed communicators." She says that brands ease, speed and reduce the cost of transactions. The manufacturers do not make the brand; the customers do.
"These expectations influence buying decisions. A brand strategy is at the core of every successful sales efforts. It sets the tone for internal and external interactions at every level.
"Branding works because it give the mind something to hang on to. The fact is that most of the products that are offered to us are good enough, but in an uncertain consumer world, we value consistency over quality, perhaps too much. A brand is a promise of reliability."
Schmatz did caution that brands are not built overnight. Marketers can not expect that attractive packaging, good marketing, or even quality products will translate into brand loyalty in short order. Brand equity, she said, "is done in the long banking of impressions over time."
She said that there is a lesson to be learned in the aftermarket from the recent past. In the U.S., as consumers shifted their focus from the do-it-yourself (DIY) to having professional installers do more work, the so-called do-it-for-me (DIFM) market, marketing did not make this same transition.
"What happened in the aftermarket is that marketers didn’t recognize who the real customer was. It wasn’t the real consumer, you are I, as the shift occurred from the DIY to the DIFME, the real customers became other members of the aftermarket."
From her experience in publishing, she says that important things were learned about how decisions, with brands in mind, are made in the aftermarket.
"Does branding work? You bet it does. Some 95% of the buyers in the U.S. aftermarket say that they use trade publication ads to make decisions to purchase a product and stimulate purchases; 96% of all the repair shop owners say that brand plays a role when they purchase a tool. The promise is what makes their decision. And 97% of all business decision-makers have taken some type of buying action because of an ad. Now an ad is not the brand, but it is part of the program."
"Successful brands today focus on the customer. It is not the consumer who specifies the brand. It is the buyer at the store, the counterperson, and very importantly the technician."
She says that research shows that, in the U.S., some 90% of the service providers specify brands when they buy.
What happens when they can’t find the brand? Using a heavy-duty market example, Schmatz says that two-thirds customers will wait for the part or, the majority of cases, go to another supplier to find that brand. "They won’t settle."
A similar outcome is found in the automotive aftermarket. Service providers and jobber personnel make the decisions on brand, though. "The fact of the matter is that in 70% of the cases, the consumer doesn’t care. They rely on the expertise of the repair shop."
As the lead speaker in the day’s events, she set the tone for further economic discussions, cautioning all to pay attention to demographic trends.
This applies to both marketing approaches and in the future of management trends. "Who will run the businesses in the future. In the U.S. [a significant number] of managers are going to retire. Who will replace them." While she acknowledged that the
"The change in employment from agricultural based industry and manufacturing industries to service based industries. The biggest growth is professional, construction, healthcare, transportation and warehousing and service producing sector. That changes your customers. That changes your customers’ customers. That change has already happened in the U.S. The fact of the matter is that the Canadian population growth exceeds that of the U.S. This is a growth market.
"The demographic realities of tomorrow are going to an older population base and a younger population base. In order to thrive, companies must find new segments to target–like ethnic customers–and attract new market leaders. In the next century retaining customers will make the most sense. Marketing programs need to be shifted to retaining the customers you have."
She believes that the Canadian market is on the verge of a more active brand marketplace. "You have some tremendous economic growth. That will play a tremendous role in creating more opportunities from growth and branding.
"As your marketplace becomes more sophisticated, consumers will demand more. Everybody in the aftermarket," she said, "must become a brand marketer and a brand strategist."
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