Market Targeting: Differentiating Your Automotive Targeting Strategies

Market Targeting

Differentiating Your Automotive Targeting Strategies

How are you currently targeting your customer base? Why types of communications are you sending out? What channels are you using? All of these questions comprise your market targeting strategy.

What is market targeting?

Unlike market segmentation which includes more detailed breakdowns like demographic or psychographic profiles, market targeting includes the level of focus your marketing strategy employs. How broad or how narrow is your target market. Check out the graphic below to better understand how each strategy carves up your DMS.

1. Undifferentiated Marketing

Undifferentiated marketing, known by the more popular name “Mass Marketing,” targets en masse everyone in the Dealer Management System (DMS). This targeting type ignores all the major differences between customers and treats everyone exactly the same. Putting it another way, there is actually no “targeting” at all, you just market everyone.

Automotive marketers colloquially refer to this type of targeting as “The Full DMS Blast,” in reference to an email blast targeting the entire DMS. The main advantage of undifferentiated targeting is campaigns are cost-effective to produce and fast to execute.

The main negative for this approach is many audience targets do not respond to this type of marketing. It captures the attention of the low-hanging fruit and leaves. The remaining majority is unlikely to respond unless the marketing is more personalized. 

For undifferentiated marketing to work, the offer or promotion needs to be widely available, the dealership must be able to consistently support it, and it should have mass audience appeal. 

2. Differentiated Marketing

Differentiated Marketing is a much more targeted approach to advertising. By taking the entire DMS one can identify common segments that customers naturally fall into. These could be customer loyalty segments like loyal, neutral, and negative customers.

Alternatively, a vehicle’s last service date could be used to identify activity points. There are a number of segmentation strategies you can employ, let’s go over a few powerful ones. Using vehicle data points, customer data points, or customer behavior interactions the DMS can be segmented in any number of ways. Differentiated marketing uses these segments types to serve up different offers tailored to the customer or vehicle. 

4 Types of Segmentation

  • Customer lifecycle segments
  • Vehicle segments
  • Demographic segmentation
  • Psychographic segmentation

3. Niche Marketing

A niche marketing campaign typically targets the sub-segment of a segment. Let’s imagine a well-known tire brand is running a promotional offer for top-of-the-line run-flat tires. The target audience for niche tire campaigns would apply only to customers with vehicles currently equipped with Run-Flat Tires or capable of using Run-Flat Tires.

The main advantage of niche marketing is the ability to specialize the messaging making it 100% personalized to the target interest.

Unfortunately, this type of marketing can be cost-prohibitive. The design time required to make multiple templates would add to the campaign cost. Alternatively, niche audience sizes can often be too small to generate the type of ROI to justify the campaign spend. In many cases, it is better to target a wider audience.

Selecting products that would resonate differently within an audience works well when the products have features that provide different benefits to different populations.

Example Campaigns

  • Educational Marketing by Category (tire, oil, brake, wiper, etc.)
  • NHTSA Recall Campaigns

4. MicroTargeting

Micro-targeting shares many of the same pro’s and con’s as niche targeting. Functionally, the two strategies are similar, the main difference being the population size. The benefits of targeting a small audience are usually directly related to the subject matter.

For example, every month there is a small population of owners that purchased a new battery 3 years ago. Although the audience is small and the initial time investment may be high, designing a series of campaigns to target this micro group of customers will have great returns over the course of the year.

The average cost of a battery + labor will return an extra $300 to $500. Bringing in 5 of these customers a month over the course of the year adds around $25,000 in additional revenue. I have found micro-targeting strategies require a lot of initial investments; however, when several strategies are working collectively, a marketer can easily drive an additional $100K in top-line revenue.

Example Campaigns

  • Service Declined Triggers
  • Service Due Triggers
  • Abandoned Cart Campaigns
  • Personalized Tire Scan Reports

Final Notes

There is never a one-size-fits-all strategy that works in market targeting. The best strategic plans incorporate a full gamut of broad and narrow focused targeting strategies. From cost-effective, quick campaigns that target the entire DMS to hyper-targeted personalized campaigns that serve niche segments; combining multiple targeting strategies is crucial to effective automotive marketing. 

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