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Net Worth Marketing Machine Shop Services In The New Millennium
By Jenna Bates
In an age of dot-coms, sound-byte advertising and consumer attention spans getting shorter, companies from the largest to the smallest have had to adjust their marketing strategies to keep pace. Production engine remanufacturers (PERs) and machine shops/custom engine rebuilders (CERs) are no exception. Today’s consumers, especially those who frequent the automotive aftermarket, are a different breed than those of 10 or even five years ago. They expect to pay less for more, and technological advances like the Internet have allowed them to become smarter about price and quality comparisons.
However, the same technological advances that have made data acquisition easier have also promoted the idea that newer is better – a concept that can hurt those who make a living in the automotive aftermarket unless they have the right marketing strategy to turn it around.
The changing consumer
"Consumers don’t think of rebuilt as quality," Shannon Box Elerson, manager of Roseville Engine Machine in Roseville, CA, told Automotive Rebuilder. "We need to improve that image."
The image of the automotive aftermarket has altered as the characteristics of the consumer have changed, and Elerson noted that the changes during the 14 years she’s been in the business have been drastic.
"We used to deal with more of the backyard mechanic," she explained. "You know, the guy who wanted to do the work himself. We sold lots of master kits and short blocks off the floor. Now we get business people and a lot of women who want it done for them. They want to pull the car in, have the work done and drive it away."
Elerson’s experience is not unique.
"The consumer is changing," said Mike Pfau, advertising manager for Jasper Engine and Transmission Exchange, Jasper, IN. "It has a lot to do with the hectic pace of society in general; the consumer today is saying, ‘Here, help me out.’"
Hugh Baskin, owner of Alabama Cylinder Head Exchange in Rainbow City, AL, agreed. "It’s not enough to offer just a good product anymore," he said. "You have to offer good service and get the product there quick."
It’s a theme every business we talked with echoed: Consumers feel the need for fast service.
"The customer is a lot more sophisticated these days," said Greg Gordon, president of Consolidated Manufacturing, Inc., Hutchinson, KS, remanufacturers of Four Star Engines. "Most distributors no longer want to stock a lot of product; they’re interested in how quickly they can get the part and how quickly they can get technical help."
To that end, Four Star Engines has provided its sales desk people with more training and continues to employ many different marketing strategies. In response to the changing marketplace, Four Star Engines made the transition from a three-step distributor that serviced only WDs in the aftermarket to a one- to two-step distribution company that goes directly to parts stores, fleets, installers and jobbers.
Since that change, Gordon said his company’s advertising budget has almost tripled. The company has hired an outside agency to handle its advertising needs, meshing what Four Star Engines knows about engines and what the agency knows about advertising.
According to Gordon, Four Star Engines advertises monthly in trade magazines and papers, has implemented direct mail campaigns, offers a quarterly newsletter to existing customers, attends tradeshows and has recently replaced its logo and truck graphics.
Like Four Star Engines, Alabama Cylinder Head Exchange continues to advertise in magazines, and owner Baskin feels that word of mouth is still a contributing factor in business retention. However, as owner, Baskin said his primary role is to "scan the horizon" for more opportunities. For example, he is considering television advertising and has been attending more and more trade shows.
Word of mouth is still a big seller for Roseville Engine Machine, too, and has been since Elerson’s father, Marshall Box, started the business in 1973. Elerson tried to get her dad to get into radio advertising in the past, but Box balked at the idea. Since then, Elerson has racked her brain and has searched the Internet for marketing ideas.
"It’s not an easily marketable industry," Elerson said.
She’s reduced the amount of phone book advertising the company previously did, citing lots of expense with little financial reward. Television ads are a possibility, but again, the expense is a deterrent. To offset the cost, Elerson is considering putting together a cable commercial that would be jointly paid for by Roseville Engine Machine and neighboring automotive businesses. Necessity is the mother of invention after all.
Jasper’s Pfau, who has been with Jasper Engine and Transmission Exchange for 22 years, has also seen and responded to many changes in marketing strategies over the years.
"For the most part, we’re still going through the same channels," he said, adding that Jasper doesn’t have much direct contact with consumers but instead deals primarily with installers supplied through its own branch warehouses. "But, we’re creating more of an awareness about our company," Pfau said.
To do that, Jasper Engine and Transmission Exchange has entered many marketing ventures over the years. In addition to advertising in the Yellow Pages, radio, newspapers and television, Jasper publishes a monthly newsletter that is sent to 56,000 customers. They are also sponsors of a NASCAR Winston Cup car, as well as other regional races. One other venture they’ve been involved in for several years is co-op advertising – an agreement between Jasper and its installers whereby each contributes to paying for a portion of the advertising.
The Internet is probably the newest and fastest growing marketing tool for automotive aftermarket businesses. But the results can be mixed. According to a 1999 marketing survey conducted by Babcox Publications, just more than 32% of those jobbers and rebuilders answering the survey have their own company web pages; however, approximately 62% of jobbers and rebuilders now have Internet access as opposed to only 14% just four years ago. All the companies we spoke to operate websites, but conduct little actual business on them.
Started approximately four years ago, Jasper’s website is primarily information-based. The site features facts about its remanufactured products, as well as a list of preferred installers who meet certain criteria, i.e., a specific sales volume, participation in Jasper’s Yellow Page advertising program, and that can provide a TV/VCR for customers to watch audio/visual materials provided by Jasper. Jasper isn’t conducting business online yet, but they do have an online catalog system, which is still in the development stage.
Like Jasper Engine and Transmission Exchange, Alabama Cylinder Head Exchange also has a home on the World Wide Web. And, like Jasper, its primary goal is to provide information.
"Commodities do well on the Internet, but we have to ask so many questions to determine the proper cylinder head a customer needs, it’s not worth potentially providing the wrong head to do business on the Internet," explained Baskin. Most of Alabama Cylinder Head Exchange’s Internet business is from off-shore businesses.
Roseville Engine Machine, which launched its website only four months ago, has found itself in a similar situation. "It’s almost not an Internet-friendly industry," said Elerson. "It’s tough to buy and ship a rebuilt engine online."
Four Star Engines, whose website has been up and running for approximately two years, offers information and is in the process of expanding. Gordon said the entire site will be updated, and he expects that the company will "turn on" the business end of it later this year. Four Star Engines can also provide (on a limited basis) an electronic catalog to customers.
Perhaps leading the way in terms of online cataloging is Enginequest, a large engine core and conversion part supplier based in Las Vegas, NV. Launched in February 1999, Enginequest’s website offers a fully-interactive catalog, which customers can either view online or download.
"We have found that approximately 10% of people who go to our website end up downloading or viewing the catalog," said Kevin Bailey, director of sales and marketing for Enginequest. "I’m extremely happy with that because it’s free advertising."
In addition, Bailey said the online catalog is a useful tool when customers speak with company representatives and want to view the product immediately. Customers who need the information quickly can be directed to the website to access photos and information.
Further, Bailey said that in the next month or so, Enginequest will expand its website so that customers will be able to purchase its products directly online.
It may be the wave of the future for the automotive aftermarket, and it may only be a matter of time before the Internet becomes a commonplace B2B (business-to-business) and B2C (business-to-consumer) sales vehicle.
According to Babcox Publications’ recent report, about 88% of Automotive Rebuilder readers who answered our survey use the Internet for access to both the World Wide Web and e-mail. They report spending about four hours on the Internet each week, with a little more than 71% with Internet access saying that they use the Internet to search supplier websites for business information.
Other marketing trends
The Internet isn’t the only new frontier the automotive aftermarket is trying to conquer. Jasper Engine and Transmission Exchange, for instance, has set its sights on perhaps one of the largest emerging demographic buying groups – women.
In an attempt to market their name even more, Jasper has sponsored several women’s workshops, where they don’t so much promote their products as much as they attempt to build a general acceptance of the Jasper name, along with encouraging the concept of using remanufactured engine components.
"A woman’s role in the automotive aftermarket is becoming more significant," said Pfau. "There are a lot of single mothers out there who are assuming what has typically been a man’s role. We offer information to help them in the aftermarket and to let them know that a remanufactured engine is an option for them."
Elerson has also taken women into account when marketing the look of her company. "The place needs to look nice," she said, "especially with more women coming in. The waiting area and counter need to be clean; it conveys the image that you do better work. It might not be true, but that’s how it works."
Consumer demand continues to change the aftermarket, and many of these changes may be due to the customer’s changing knowledge of the industry. This knowledge seems to have increased in terms of researching pricing and service, but may have decreased when it comes to a working knowledge of the product and its proper installation.
"The customer is really different," Baskin said. "Ten years ago, I would set a new cylinder head on the counter, and the customer would say, ‘Wow! I’m used to seeing used and reman heads.’ Now, they say, ‘What’s that?’ They don’t even know what it is; all the customer knows today is that he needs it fast, and he needs the best price he can get."
In fact, Alabama Cylinder Head Exchange has started stocking new cylinder heads in addition to the remanufactured ones upon which Baskin built his business 13 years ago. Baskin said that often times today’s customer would rather spend the extra cash for a new cylinder head than a remanufactured one.
On the other hand, Elerson has observed that many people go other places in an attempt to save money but never ask themselves why it’s cheaper. "They just think of it as a commodity product and not as an intricate piece of equipment that takes a lot of man hours to produce."
However, though price tends to lure customers, consumer reports show that it’s not what keeps them. Baskin agreed. "I can name two people who came into this business based solely on price, and they’re gone now. Quality is the number one reason people stay in business; speed in retrieving the product is number two. Then, price is at number three. It all comes down to information, technique and timing."
That’s something the people at Roseville Engine Machine have taken to heart.
"We answer a lot of questions for people," Elerson said. "We end up spending a lot of time with customers. There are so many options out there for people, and that’s where the word of mouth comes in. We offer service."
Jasper’s Pfau sees the subject in much the same light. "As far as change goes, the basics are still there," Pfau explained. "We still take the basic premise of, ‘Here’s what we offer.’ But, the marketing services are becoming more technically oriented. Now we offer solutions to help grow our installer customer’s business in order to grow ours. Today it’s more than just offering a product and saying, ‘Here it is.’"
Four Star Engine’s Gordon agreed. "It’s important that companies understand who their customers are, who they’re selling to," Gordon explained. "The more you know about the customer, the more you can do for them and for your business."
With so many commodities out there, installers and consumers are looking for what’s unique about a company and what it can offer in terms of service. "The easier you can make it to do business with you, the more information you can provide, whether technically or through marketing support, the better off you’ll be," Pfau concluded.
Consumers as a whole are more savvy these days than they were in years past. According to recent consumer reports, customers seek an overall "purchasing experience" instead of just the act of buying a product.
Reports indicate that leaders in the marketplace of the future will become more focused on their products’ ability to satisfy more niche markets. No longer will the focus be on just being as big as possible, but rather on being as specific as possible – a concept popularly called "mass customization."
In the end, marketplace leaders will give the consumer more for less, providing not only quality products but also an innovative and supportive shopping experience.