How people buy studies have shown that consumers move

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Unformatted text preview: both the functional and the process and relationship benefits of the model in question. How people buy Studies have shown that consumers move through the purchase process predictably. In choosing a car, for instance, they typically start by considering five or six models, adding some and dropping others as they proceed. The number of vehicles narrows as consumers move from awareness to familiarity to consideration to the test drive and, finally, to purchase. Brands pass through a “purchasing funnel” in which products are subjected to new requirements at every stage of the selection process. By crafting the brand-management effort to deal with these requirements as they unfold within each market segment, companies can overcome obstacles to purchase (Exhibit 2). Brand managers who emphasize their models’ common identity will capture more customers at each point in the funnel. Therefore, CNW Marketing/ Research, an independent firm specializing in the automobile market, can say that 93 percent of US car buyers who “considered” a Mercedes in 2000— that is, had narrowed their choice to a Mercedes and no more than two other brands—eventually bought one. This is the industry’s most effective conversion rate; it means that Mercedes had to attract just 107,000 prospects for every 100,000 cars sold. By contrast, for every 100,000 people who bought an Oldsmobile or a Mercury, more than 500,000 people had to be persuaded to consider the car. Isuzu, by this measure among the worstperforming current brands, had to attract nearly 1,300,000 prospects to sell 100,000 cars. Such inefficiencies are rooted in the marketing budget. Up to 90 percent of the carmakers’ spending is devoted to the first stage of the purchase process (in the form of mass advertising) or to the last (incentives and rebates). What is left over goes into direct mail, special events, press relations, World Wide Web–based marketing, and so on. These underutilized tools are well suited to reaching people at the crucial middle stages of the purchase process, when a consumer’s inclinations are confirmed or resisted. They are also far more efficient than mass advertising or incentives and rebates. Our analysis suggests that companies could cut their mass-advertising costs by as much as 15 percent—delivering more than $2 billion a year to...
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