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How to beat commoditization in the automotive aftermarket

Friday, October 20, 2017 - 07:00
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Rising demand for automotive parts and services is spurring new growth and revenue opportunities in the global aftermarket. With the overall market value expected to hit $722.8 billion by 2020 (according to Global Industry Analysts), a wide range of businesses operating in the industry stand to benefit.

However, the sales environment is – as it has always been – tough, and competition for new customers is fierce. Larger parts and service providers are dominating the industry, undercutting their smaller rivals on price. These bigger businesses can also afford to produce a near exhaustive range of products, as well as invest significantly in go-to-market technologies.

As a result, commoditization is increasing and a price war has started. When consumers are unable to distinguish between two suppliers’ parts and services, their decision largely comes down to cost. This makes it increasingly difficult for smaller players to compete. Complacency is not the solution, however; sales and marketing teams need to put their experience, skills and knowledge to good use and give their businesses a competitive push. 

To overcome commoditization, brands need to become as non-generic as possible. An important starting point is revisiting and revising the sales and marketing strategy. A thorough review of the four Ps – product, price, place and promotion – is fundamental to improving sales.

Product

A product must meet market demands. Instead of focusing on their competitors, smaller companies must research their customers and get to know exactly what they need. Only then can they assess rival products and spot any gaps or missed opportunities.

If, after this in-depth review process, a company realizes that its products and services are no better or worse than those of its competitors, it’s time to think innovatively. One option may be to develop a whole new product line. That said, it’s not always possible to design differentiated automotive parts because one is often very much like another.

In cases like this, companies can also consider including value-adds in their offers, such as a free or reduced-cost maintenance plan to ensure equipment stays in working order. Customers are attracted by affordable deals that offer superior personalization and convenience. And, if they like the service they receive, they’ll usually come back again.

Price

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