Knowing what make and model car a prospective customer is currently driving can be a good predictor of what they are likely to buy. However, market research in auto purchasing behavior suggests that this information is not the only relevant data point. Auto buyers often only consider vehicles in a comparable category with a similar price tag as viable choices that they will eventually buy. Having information about all the vehicles in the right category for a prospective buyer might get them into the showroom and out on a test drive.
Vehicle Consideration Sets
In June of 2000, Congress passed the Shelby Act, prohibiting the use of vehicle ownership information- including the use of make, model and year data in direct marketing solicitations. The only permitted use of vehicle ownership data is in the development of analytic predictive models or on support of recalls. Predictive models can be used to build marketing lists because they safely and legally reflect ownership intent. Statistically predicting the likelihood of owning a particular make or model based on demographic factors consistent with those of known owners is a permitted use of this data.
Semcasting,Inc. has designed a solution for marketers that is based on the belief that many, if not most, households who are in the market for a new vehicle consider more than one vehicle or brand before they buy. Many households are open to considering and test driving different vehicles, but the vehicles generally fall into similar vehicle "consideration sets" that are defined by body style and price. Semcasting Auto Consideration Sets reflect auto ownership information in the household over a period of time and incorporate that information into 11 different predictive models. Every household will have a rating of 1 through 5 on their likelihood to own or purchase an auto for each of the 11 consideration sets. Also incorporated into the models are vehicle value, life stage, home ownership, family composition, age, income, discretionary income and other factors that reflect household demographics.
Auto manufacturers, dealers and marketers can get a score for 11 consideration sets, which can be used to accurately identify their best prospects for targeted postal and e-mail mailing campaigns. This approach to the targeting of potential auto purchasers allows marketers and manufacturers to reduce marketing costs while increasing their promotional efforts.
The Vehicle Value Index
The Vehicle Value Index determines the relative value of the vehicles in the driveway for every household across the country. That value can be used to determine the level of investment a particular household is likely to commit to a vehicle by considering factors such as life stage, income, discretionary income and household composition. For example, a couple in their late 60s determines that it is time to trade in their six year old 5-Series BMW. As a marketer if you considered only the fact that they currently own a 5-Series, promoting a new $80K replacement BMW might seem like the logical offer. However, because this household is approaching retirement age, it would not be uncommon to see an increase in attention to social issues and less of an investment in a new luxury status vehicle. When you apply the Vehicle Value Index to this household, it also considers other factors such as life stage and discretionary income. Instead of scoring a 1 out of 10 (1 being the best and 10 being the worst) for a new 5 Series, their household score is now a 2 – and instead of scoring a 5 for a Prius, they now score a 3. These added household behaviors help to improve the effectiveness of your targeting, creating a better response rate and an increased ROI.