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Auto Shows Help Buyers Find Models They Like

Auto Shows Help Buyers Find Models They Like

By Jeff Youngs, March 05, 2012
To read local media coverage of the 2012 North American International Auto Show (NAIAS) in Detroit, you'd think that the annual exhibition of new and concept vehicles was single-handedly turning around not only the struggling local economy, but also the entire U.S. auto industry. But that would have been missing a huge part of the show's importance.

The NAIAS, with its pulsating light-and-music shows that accompany new-vehicle introductions, served as the platform for a record 40 worldwide debuts of completely new or substantially upgraded production and concept vehicles. More than 5,000 journalists from around the world flocked to Cobo Center in downtown Detroit to see what was on display.

"Extensive auto show coverage has been seen in media outlets around the world," Bill Perkins, chairman of the 2012 NAIAS, said before the show was open to the public. "Our show and our city have been positioned as winners, and we are very, very proud of that."

Another group of big winners from the success of the NAIAS were the automotive consumers of southeastern Michigan. That's because another important purpose of auto shows is to serve as a convenient, stimulating, one-stop resource for customers in the local market that hosts the show. The Detroit Auto Dealers Association actually hosts the NAIAS, and does so because they understand how crucial the show is for generating interest among the buying public-and getting them into their showrooms to track down what they saw at the show and perhaps make a purchase.

"Auto shows have always served two purposes," explained Mark Schienberg, president of the Greater New York Automobile Dealers Association, which hosts the New York International Auto Show annually in March. "They help consumers make the decision that they want to buy a car. And [going to a show] helps them decide on what model vehicle they're probably going to buy. Because of an economic climate that is still establishing recovery, that's more important for the industry than ever."

Schienberg acknowledged that, during the Great Recession, some suggested that shows had outlived their usefulness; that because they had become a marketing extravagance, automakers would critically re-examine them as the recovery took hold. However, while car manufacturers have been exercising newfound discipline in areas such as product development efficiencies and costly sales rebates, they have continued maintaining robust presences at auto shows as the industry recovery has taken hold. Nissan, for example, returned to the Detroit show in January after a three-year absence.

"Auto shows are still a very important component of our marketing," said Keith Dahl, Toyota's national marketing manager. "They're a great opportunity for us to begin a dialogue with our customers, and in that regard they're an important bridge to dealers. And of course they help us showcase our new products and services."

Auto shows have come to occupy important and varied places in the industry's global marketing scheme. There are three tiers of shows worldwide, and each type of exhibition has an important and distinct role to play, with varying balances between emphasizing the broader needs and goals of the industry and the localized needs and goals of dealers, auto show visitors and consumers.

On the top level are just a handful of premier shows around the world: Detroit, in North America, in January; Geneva, in Europe, in March; and Tokyo, in Japan, held every other year in the fall.

These exhibitions are the unparalleled stage where automakers from around the world congregate to gain maximum visibility for new production models and concept cars, and to share their vision on corporate and industry affairs with the thousands of journalists, bloggers, photographers, filmmakers and other media types who congregate at these shows.

It's usually possible to tell what's top of mind for industry executives from what they collectively emphasize at auto shows. Three years ago, in the depths of the Great Recession and in the wake of the first flash in the United States of $4-a-gallon gasoline, frugality reigned at auto shows with an emphasis on fuel economy. Two years ago, electrification of powertrains was the theme du jour. And this year, a return to an emphasis on styling and performance seems to be in the air.

Mainly because of the huge importance of top-tier shows to brands and products and how they're portrayed around the world, local promotion and sales of the shows and the vehicles displayed there tend to take a back seat.

The second tier, close below the top shows, consists of exhibitions in a handful of important cities globally that are important both for the products debuted and displayed there, as well as for the show geographically. On this middle level are North American shows including Chicago, in February; New York, in March; and Los Angeles, in November. The Frankfurt motor show, held for automobiles per se only every two years, is another. And the Shanghai and Beijing shows alternate years in China, taking on increasing importance as the Chinese auto market has become the world's largest.

The New York show, for instance, obviously carries great import for automotive brands in general because it occurs in the world's media capital at the beginning of the crucial spring selling season in North America. Yet the Gotham exhibition also has particular regional importance for some automakers, considering that metro New York is the largest vehicle market in the country for 20 of the 35 major automobile brands. The show stands out for Mercedes-Benz, for example, because it gives the iconic German brand unparalleled access to its target consumers.

So the company's floor space is larger at New York than at any other U.S. show. "New York is a very important event for us, with the market and the audience it reaches, so we put big resources behind it," said Lisa Holladay, manager of brand-experience marketing for Mercedes-Benz USA.

On the third level are hundreds of locally oriented shows in metropolises around the world that may get touches of attention from the automotive brands but, mostly, are run by local dealers' organizations primarily for their benefit and that of consumers who want to see what the market has to offer all in one place. Philadelphia, for instance, runs its show annually at the end of January, and organizers cite their "proven track record of influence on consumers." In 2011, the Automobile Dealers Association of Greater Philadelphia said, "nearly 90 percent of the attendees in the market for a new vehicle reported that visiting the auto show influenced their next purchasing decision," according to exit surveys.

Especially on this lowest level but to a great extent on the upper two levels as well, the local importance of auto shows largely stems from the place they occupy in what the industry calls the consideration "funnel."

Imagine the automotive market shaped like a funnel, with the broadest number of American consumers, who are only vaguely interested in a new vehicle, at or near the top; the smallest number of intensely interested purchasers very near the bottom; and everyone else engaged in the process located at various stages in between.

Different automotive sales and marketing activities are important for addressing people who reside at specific locations in the funnel. For example, if a consumer is perhaps just noticing car commercials on TV more than before, or is occasionally riffling through a copy of Motor Trend, he is at or near the top of the metaphorical funnel.

Doing research online-and dropping by a dealership on the way home from work-indicate that a consumer has moved lower into the consideration funnel, where she may at any time become more intentional about actually shopping for a new vehicle.

And by the time shoppers show up at an auto show, often they've moved into a position of strong consideration-and perhaps imminent initiation-of an actual purchase.

Both automakers and independent market researchers have documented a strong and compelling statistical connection between auto-show attendance and subsequent vehicle purchases.

General Motors and Chrysler both have found that about 50 percent of show-goers actually buy a vehicle within the next year. Show executives across the country echo those numbers. About 60 percent of attendees at the Philadelphia Auto Show over the last decade planned on buying a new vehicle within a year.

Last year, nearly three-quarters of attendees of the New York International Auto Show planned to purchase or lease a vehicle within the next two years, an exit survey showed, while a separate canvass of e-ticket purchasers indicated that about half of them planned to buy or lease a new vehicle within a year.

And between 60 percent and 70 percent of attendees at auto shows in each of 19 major cities in 2010 indicated that the event "had an influence" on which make or model of vehicle they "ultimately would purchase," according to research by Adstrategies Inc.

The New York show's survey of e-ticket customers in 2010 found that attending the show was extremely, very, or somewhat influential on purchase and leasing selections of about 86 percent of respondents.
"It's a great opportunity for people to see products in a no-pressure environment and walk just 15 feet away to a competitive product if they want to," said Kurt Antonius, assistant vice president and shows director for American Honda.
"If you're really low in that funnel, then it's certainly easier than driving all over town."
The way Toyota's Dahl sees it, "People are paying money to come and see you" at the show. And if not all attendees are those "engaged in the funnel," as John Felice, Ford's general manager of marketing for Ford  and Lincoln , said, "then they really love cars, and that's why they come."

Chrysler's Phil Bockhorn, senior manager of shows and events, agreed that "you can't find any other element of the marketing mix that is so strong in terms of self-selection." And he said new research demonstrates that auto-show-goers are more discerning than even a few years ago. "People are actively shopping up to twice as many makes at the shows as they used to," said the company's senior manager of shows and events.

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