Know-How Exchange : Strategy

Channels survive where they add value. What value does the dealer provide that other channels do not?

Thinking about that, I can think of a few things:
• Test Drives
• Physical viewing (look, feel, touch, smell, sound, etc) of the range of vehicles, fitouts, finishes, etc.
• Hearing the sales person’s “pitch” about why one vehicle may be better or more suitable than another
• After Sales Service and scheduled maintenance
• Parcelled-deal Trade Ins (take this, leave that, pay the difference)

Remember the automobile is for many people financially the largest purchase they will make after their home. Not everyone is comfortable with buying from a screenshot… Unless… They have already decided exactly what they want, and now all they are doing is shopping around for the lowest price. This may mean they visited a dealer who did not get the sale – possibly for a whole host of reasons other than price.

Conversely, Channels fail where they add no value, at least where that value is not perceived as valuable, by the consumer or customer. For example, where I live (Australia) it’s often rather warm. We used to get our milk delivered by the dairy overnight. However, with the advent of supermarkets and convenience stores over the last 30 years, consumers prefer to get their milk from a refrigerated display cabinet in the store, rather than paying a premium for warm milk delivered and left outside in the sun. See what I mean? What aspect of the traditional car dealer channel might consumers find valueless.

My perception of the automobile sales channel is that dealers are moving more and more into niche market service delivery in order to create differentiation. My local BMW dealer has a glass-ceilinged wine cellar you can see through from the showroom floor. The implication is if you sign a contract you get to drink some rather exclusive vintages to toast your decision. Cheesy? Certainly, but successful – indubitably!

More homely, budget branded showrooms might offer bundled service, fuel or other freebies, separate from manufacturers runout deals, to grow share from less aggressive competitors.

Russia is the only place I heard where you pay for your new car in full up front through some buro then wait six years for delivery. Maybe it’s better than that now, but that was the pre-free market story…

To get to the bottom of your challenging conundrum, you probably need to:

• Identify all existing channels
• Analyse their value chains to clarify the value in each channel
• Isolate key value creating areas and see whether they could be accommodated into a new channel model – ideally one which retains value, but dissipates cost away from the channel (up or downstream).
Then you may be in a position to start building a new, more viable channel than exists anywhere today.

Good Luck!

You need to simply ask where are your prospects expecting to be able to buy your product.

Direct from the lot ... yes
Internet ... yes

Is there anywhere else your potental customers might want to pick up a great deal on a car ? Probably ... try looking at options of putting a couple of your best stock near shopping areas, cinemas etc (with permission of course), but give the owners of these places a % of sales, then you don't lose out.

Thanks all of for your ideas in car distribution channels