• Perception, media buzz, and what the customer actually wants to buy

    Posted on January 5th, 2010 by and currently 6 commenting.
    Photo via me, Eric Dodds.

    Photo via me, Eric Dodds.

    What would your gut reaction be if someone asked you why domestic automaker market share has declined over 25% in the last 12 years? Lack of quality? Lack of innovation in green technology? Inferior manufacturing capabilities? Horrible gas milage? Those were my reactions too.

    But it turns out there’s a difference between my perception of whose cars have lasted longest of the people I know, hot environmental topics in the media and what car-buyers actually wanted in the vehicles they purchased over the last decade.

    Quite simply, people wanted cooler-looking cars.

    Woah…what? It’s true. In a recent study from Virginia Commonwealth University, researchers found that, though other variables were important,

    “The positive impact of a restyling dominates the other determinants of demand and accounts for the secular decline in domestic market share. A complete restyling on average has a ten times greater impact on market share growth rate than even a 10 percent reduction in relative price. Furthermore, manufacturers would have to double relative advertising expenditures to achieve an effect comparable to a complete restyling.”

    And one of the researchers, Professor of Economics George E. Hoffer, makes this point in a related video:

    “…re-styling dominates everything else. People like to say well, the Americans haven’t been green, the Americans haven’t been on the safety frontier, the Americans haven’t had the quality. We find, really, that’s not very important.”

    Gut check. Quality, green-ness, gas milage – important, but not MOST important. Popular rationale in purchase decisions usually take a back seat to the emotion that drives the final choice. And as the study shows, if you can’t find that desire, you’ll have to drain your advertising budget to sell a product that people just don’t like as much.

  • http://christybrewer.wordpress.com Christy Brewer

    Okay, seriously: Great job using an independent study to make your point. Frankly, I’m tired of the endless debate about quality, gas mileage and price in terms of why certain segments of cars aren’t selling.

    We can get anecdotal on this, but the data from this study speaks for itself. Oh, and wait for the onslaught of “my cousin bought x because of y” arguments from all over the place. ;-)

  • http://brainsonfire.com Eric

    Christy -
    I think there are a good number of people who are tiring of that debate. And I do love data – numbers don’t have an opinion. Thanks for reading!

  • http://jeffhora.wordpress.com/ Jeff Hora

    Another great post.
    There are a large number of relatives/friends/acquaintances that have purchased a particular car because “it is cute”……no kidding.
    As you mentioned, all of the other factors are important, but visceral attractiveness is HUGE.
    …same goes for some other products, too…..

  • http://brainsonfire.com Eric

    Jeff-
    Ha! “Cuteness” as a determinant of demand makes me smile. And wildly, it’s true in many cases, as you pointed out. Thanks for stopping by.

  • http://www.neoviasolutions.com Holly Hoffman

    Too true. What can I say? Buicks are… ugly. And to Jeff’s point, my current car crush can be best described as “cute”… and it’s an import. :)

  • http://brainsonfire.com Eric

    Holly –
    Love the car crush – may I ask which model you’re looking at? Also, thanks for sharing – you are the anecdotal proof of the study!