New research has found that Australians are shunning established brand loyalties as global supply chain issues and stock shortages impact purchasing decisions across the country.
Coupled with a backdrop of inflation and the rising cost of living, new trends have emerged in place of traditional buying patterns, meaning marketing approaches must adapt quickly.
The research, conducted by CarsGuide Media, indicates marketers need to adapt as Australians begin seeking products and services beyond typical brands and channels. The new and used vehicle markets provide a snapshot of the broader issues facing marketers across segments as paradigm shifts take place and usual buying patterns are disrupted.
Stock shortages have driven new car prices higher, with more than one-third (29%) of Australians surveyed saying they have delayed selling their vehicle, with the majority (66%) holding onto their vehicle for more than three years.
In the used car market, where prices have increased a record 65%[1] year-on-year in the first half of 2022, many buyers (29%) believe that the higher used car prices make it more economical to buy new, out of step with the traditionally separated used and new car markets. Additionally, used buyers considering new cars are more open to alternative brands from companies who have product readily available with 33% of used car buyers saying they are more likely to consider an alternative brand compared to 29% of new car intenders.
“The current economic conditions have created the perfect storm for consumers to consider products and services that they’ve previously overlooked,” said Jodie Smith, Head of Partnerships Automotive, CarsGuide Media (pictured above).
“This changing landscape demands a shift in the way we market and sell to consumers as more traditional avenues won’t reach cohorts who are transcending conventional boundaries whether they’re buying cars, vans or motorcycles. Marketers need to adapt to the rapidly changing landscape with more targeted campaigns to reach newly emerging cohorts and subsets that these unique circumstances have produced – they must target beyond their traditional base,” she added.
The rise of brand switchers
This volatile economic climate has a profound impact on more traditional marketing approaches, where trusted, dependable brands previously outperformed products and services from companies that consumers have not considered in the past. As a result, successful marketers are moving with their audience across a multitude of businesses to promote convenience and value.
“This is a significant opportunity for challenger brands to develop a relationship with customers who were seemingly previously out of reach,” Smith explains. “The acceptance of less traditional brands has been seen in supermarkets, for instance, who’ve reported increased interest and experimentation with products or brands outside of those originally sought[2] . People are now more often having their brand preferences challenged as they become more pragmatic, meaning marketers must follow them by adapting their messaging and broadening the scope of their activity.
“Not only that, as the economic environment becomes more uncertain, marketers need to be smarter with how they allocate their media investment to ensure they are reaching their key markets as efficiently as possible. To help, CarsGuide’s Audience Match allows brands the opportunity to focus on their most profitable customers, and those that share common audience characteristics, while suppressing existing customers that may be less inclined to upgrade due to a recent purchase or age of their current vehicle.”
For in-market new car buyers, if their first preference isn’t available immediately, one-in-three (29%) intenders will buy an alternate vehicle brand, rather than waiting on delivery of their preferred new car.
Brands suffering stock shortages are likely seeing a decline in interest. While some are willing to wait for their car to become available (29%), most intenders are open to new brands with only 16% not wanting to learn about alternate brands that have stock available now.
“According to the research, the biggest opportunity for brands, is to target outside of their current customer base,” says Smith. “Standing still at a time like this will see many miss a fantastic opportunity, especially for challenger brands, who can leverage this window to win conquest customers and generate trust, acceptance and brand loyalty for the future.”
Australians tapping COVID savings
While the rising cost of living is beginning to hit Australian’s back pockets, COVID-19 lockdowns also provided many consumers the opportunity to save more than usual, leading to increased financial security. We’re seeing this clearly with 53% of new car buyers and 61% of used buyers accessing their piggy bank to fund their upgraded wheels.
“The fact that the majority of buyers are ready to buy means that the time from consideration to purchase is more rapid than before,” said Smith. “It’s critical that both private sellers and dealerships have their vehicle seen far and wide for a faster sale – again, beyond traditional bases – as buyers are primed and want to purchase, with a willingness to transact that we haven’t seen before.”
Over half of new car intenders (56%) are dipping into their personal savings to make their purchase. Interestingly, that number goes up for higher priced cars, with those with budgets over $80k, 7% more likely (63%) to fund their new car with savings.
This readiness to buy is also reflected in the used car market where the average budget is $30,555, just shy of the record average transaction price of $33,000 set in the first quarter of 2022.
As the economic climate impacts buyer behaviour, marketers have an active opportunity to tap into new cohorts and convert Australians previously sceptical of challenger brands. For established brands, it means responding rapidly to remain effective, and ensuring that more consumers have a pragmatic reason as well as an emotional pull for your offering.
[1] Moody’s Analytics, Australia – Used Vehicle Price Index, June 2022
[2] McKinsey and Company, Emerging cautiously: Australian consumers in 2022, July 2022
