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#autobond: Marketing Intangibles and Intangible Marketing—Lessons for the Automotive Industry

Posted by Chris Travell

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May 26, 2016 3:22:13 PM

Back in 1981 the economist and Harvard professor Theodore Levitt published his landmark article in the HBR, “Marketing Intangible Products and Product Intangibles.” It’s a great read since his insights relate directly to many of the challenges marketers face today. 

When prospective customers can’t experience the product in advance, they are asked to buy what are essentially promises—promises of satisfaction. Even tangible, testable, feelable, smellable products are, before they’re bought, largely just promises.

Largely just promises. Doesn’t that just encapsulate the challenge marketers face?

In the car business, the marketing of intangibles is paramount to success. If a dealer sells a Chevrolet or a Ford or a Toyota, that isn’t necessarily a sustained competitive advantage. Unless you live in a rural area, there’s a dealer a short drive away who sells an identical product. What then becomes the differentiator? The intangibles.

What does this mean? In an automotive context…

  • It’s the incredible enthusiasm of the salesperson who simply doesn’t see the customer as another “up,” but rather, as someone with whom they want to have a meaningful interaction to share their passion.
  • It’s the service advisor who effectively communicates and demonstrates exactly what’s wrong with the customer’s car and why it actually does take 2.5 hours to diagnose and fix the problem.
  • It’s the delivery specialist who realizes that picking up a new car is “magical,” and does everything possible to make that experience the very best it can be.
  • It’s the dealer principal who bent down right onto the ground and spent a considerable period of time adjusting the welcome mat at the dealership since he realized that this was the first impression customers had when they came into the store (and yes, I actually did see this happen).

autobond-intangibles-1.jpg

Levitt wrote about this reality in the car business 35 years ago when he says in the article:

The promoted products of the automobile, as everyone knows, are largely status, comfort, and power—intangible things of the mind, rather than tangible things from the factory. Auto dealers, on the other hand, assuming correctly that people’s minds have already been reached by the manufacturers’ ads, focus on other considerations: deals, availability, and post-purchase servicing. Neither the dealers nor the manufacturers sell the tangible cars themselves. Rather, they sell the intangible benefits that are bundled into the entire package.

Note the last line in particular “…intangible benefits that are bundled into the entire package.”

The Importance of the Front Line

A key intangible going forward—something at which manufacturers and dealers need to do a better job—is emotion. It has to be infused into the vehicle buying and ownership experience more effectively than it has been. Millions are spent in tier one advertising to convey emotion, but sadly, it often doesn’t carry through at the dealership level when customers come in to buy. autobond-intangibles-2.jpg

I’m not alone in this thought. Forrester has recently come out and said that three factors need to be designed and built into CX programs: ease, effectiveness, and emotion. 

As a manufacturer or dealer, how are you building emotion into your CX? Product and process training can only take you so far and many manufacturers are doing a pretty good job at this. The differentiator is the intangible of emotion.

Bond's recent Automotive Brand Telemetry Report found that loyalty to automotive brands is driven by consumer perceptions on a variety of Functional, Emotional, Brand Personality and Needs-Fulfillment evaluations. Emotional factors drive 31% of customer loyalty—so it's important.

A Challenge

I want to lay down a challenge to you (ok…several challenges but you get the idea). Regardless if you’re a manufacturer or dealer:

  1. What are you doing for your customers in their vehicle buying and ownership experience that makes the intangible tangible?
  2. Apart from the product itself, how is the benefit of that customer’s buying from you and not from someone else being made real?
  3. Is that benefit sufficiently articulated and big enough to differentiate it from your competition not just in your eyes, but more importantly in the eyes of your customers?
  4. Since emotion is intangible but a potentially big differentiator, how are you communicating it through your front-line people, both on the sales as well as the service side of the business?
  5. Read Levitt’s article and take it to heart. Just because something was written decades ago doesn’t mean it’s without merit.

Until next time.

Chris Travell
Director, North American Automotive Solutions

Topics: Customer Experience, #autobond