A friend of my father's taught me there are only three markets: price, value and quality. Price-driven consumers want the lowest possible purchase price, period. In car terms, they want to pay as little as possible for a vehicle. Everything else is secondary. If the car falls apart, if it loses them money in the long run, it doesn't matter. Manufacturers catering to these customers need not concern themselves with anything other than purchase price. At the other end, quality driven car customers want the best car, money no object. Manufacturers catering to quality-seekers have a [relatively] easy time. All they have to do is secure the world's best talent, give them the resources they need and not get in their way. Value-driven customers balance price against quality. Automobile-wise, they want as much of everything as they can get– economy, features, safety, ride, handling, resale, the whole schmeer– for as little money as possible. Manufacturers aiming for value-driven customers are fighting an endless war against everything: low-end carmakers aiming high, high-end carmakers aiming low, direct competitors, production costs, fashion trends, technological innovations, you name it, they've got to sort it. Like Icarus, the one thing they must never do is fly too high. Ford GT. Chevrolet Corvette. The new Saab Turbo X, Mitsubishi Evo and Toyota Land Cruiser. If a consumer says, wow, that's a lot of money for a —–, it's a clear sign that a value-oriented car brand is shooting itself in the foot. Short term, it can work. Long term, it's a big mistake.
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Huh?
Value-driven customers balance price against quality. Automobile-wise, they want as much of everything as they can get– economy, features, safety, ride, handling, resale, the whole schmeer– for as little money as possible.
With greatest respect RF, this is not much of an analysis. The above quote describes ALL consumers; it doesn’t matter how much money you have, you still want to pay as little as possible while still obtaining what you want. It is a game of trade-offs.
One of the most fundamental concepts of economics is things don’t boil down to three markets; for any given good, they boil down to a single market, and all information about that good is represented by its price. Your post amounts to saying nothing more than “consumers differ in their preferences.”
NoneMoreBlack :
With greatest respect RF, this is not much of an analysis. The above quote describes ALL consumers; it doesn’t matter how much money you have, you still want to pay as little as possible while still obtaining what you want.
With greatest respect right back atcha, cost-driven consumers want the lowest possible cost. They will sacrifice just about anything to get it.
Quality-driven consumers don’t care about paying as little as possible for the best of the best. In fact, they’re quite happy to pay a premium for the privilege of paying a premium– restricting others’ access to the obscure object of their desire.
Interesting. I think that you are both right. However I think we would do well to consider the bell curve. I think the vast majority of the automobile market fall in the 6 sigma of value. While the other two (price – quality) exist, they don’t amount to much. The tail ends of the curve. I also think the curve will behave like a wave in response to economic conditions, cresting towards price in times like now.
Is the Evo really over the top?
Price consumers will buy the Chevy Cobalt
quality consumers will buy the Mazda 3
Value consumers will buy the Honda Civic
Joe ShpoilShport:
Yes. Mass market manufacturers must sit right in the middle, in the “meat” of this curve.
My main point: value-oriented manufacturers stray away from their meat and potatoes market at their peril.
The Nissan 300ZX is the poster child for what happens when you improve a model out its market. Who doesn’t love that car? And yet its beautiful plumage couldn’t save it from the cruel Darwinian effects of sticker shock. Automotive “Evo” is ruthless like that.
Strippo is bang on. The 300ZX, Mazda RX-7 and Toyota Supra all got to the price point where people preferred to buy a brand that had the cachet to go along with the price.
Sorry to be the airplane dork here, but the Grumman A-6 Intruder, perhaps one of the finest purpose-built combat planes in our nation’s history, was retired in the late 90’s, regrettably. The EA-6B Prowler is the ‘crew-cab’ version of the Intruder and still soldiers in Navy and Marine Corps squadrons as an electronic warfare aircraft. Perhaps the listener you refer to is a Prowler pilot? At any rate, it’s good to know the site attracts folks who fly the most amazing airplanes in the world. Thanks to all who serve.
They say there’s two types of guy in the Australian outback – Cruiser men and (Nissan) Patrol men. Nissan actually made ads about it. You won’t hear too many complaints about Land Cruisers here, except maybe with the price. But Toyota have been proving Cruisers here for years on end and I’d be very surprised if they let this one go unproven. And I hate Toyota.
The technology(Internet)that empowers the consumer, is also the one that places additional emphasis on price.
For a consumer to grasp value or quality is not as easy as to grasp price when he is in front of his PC searching, comparing.
In market segments that are highly competitive, where features, performance, are almost identical it becomes a game of price and financial services that give an advantage to a manufacturer.
N85523:
I wasn’t being clear. You’re right: our Marine Corps pilot podcast listener flies the [soon to be retired] Prowler. But it is the same plane as the Intruder.
I don’t see how anyone can say the Ford GT is a “value car” with a straight face. The fact that people were paying sometimes six figures over sticker for it easily explodes that argument. It was a limited edition supercar, and that’s all there is to it. Sure, the badge snobs may have poohpoohed it, but no one else.
The same holds true for the Corvette and Land Cruiser. I don’t think people just say “That’s a lot for a Chevy or a Toyota” and immediately write them off, like you seem to be doing. They both have some pedigree, some history, to (somewhat) justify their prices.
That didn’t seem to help those Japanese GTs that Strippo and Dean were talking about. I think that’s because the older ones increased in price so quickly, and the new boys started that high. You can add the Mitsubishi 3000GT (and its twin, the Dodge Stealth) to that list. Just looking at the prices for some of them in 1995, before they started dropping like flies:
Mitsu 3000GT VR-4 Turbo AWD Hatchback: $43,898 (320hp)
Toyota Supra Turbo: $47,500 (320hp)
Mazda RX-7 Turbo: $37,800 (255hp)
Nissan 300ZX: $42,579 (300hp)
—————————-and for comparison’s sake
Chevy Corvette: $36,785 (300hp)
Toyota Land Cruiser: $38,688
The Supra Turbo was hugely more expensive than the LC, Corvette or any of it rivals. No wonder Toyota was wholesale-ing them at the end of the run, like Jim Farley said.
Hmmm….I know I read an article saying there was a heated exchange between Nissan dealers and Infiniti dealers about who should get the new, $70,000 GT-R. Infiniti dealers said, “This is a $70K car. Plainly, this is in our price range.” Nissan dealers, however, said “The GT-R has always been a Nissan, so it should stay a Nissan, and act as a halo car for the others in the range.” Eventually, the Nissan dealers won out.
What’s interesting to me, is the fact that certain online resources that start out quality based usually end up heavily price based in the end.
When I started selling vehicles on Craigslist a few years ago, my average customer was usually an IT professional or university student/employee. They were interested in getting a specific type of brand and almost always, their budget was north of five grand.
Fast forward three years later and Craigslist is absolutely deluged with price focused buyers who want very low end vehicles. About a third of the calls I get are from people who want me to finance them, and another third try to negotiate even before seeing the car. The $5000 and up car gets very little play now. To make matters worse, it seems like there is an amazing number of sleazeballs and scam artists online… on both sides of the proverbial fence. I’ve seen vehicles that I sold at auctions with salvage titles get put online with no mention of that title’s history.
For now I seem to be the only one in my market who actually provides a history on the vehicles. It’s been a saving grace in terms of my side income. But for right now I’m seriously considering just having a few of the vehicles sold at buy here / pay here lots instead. The human elements that I’m experiencing just aren’t worth the time or potential risks.
Ebay didn’t experience as severe a decline. But like Craigslist, the qualities of the buyers and sellers have declined over the years. On Ebay they will always do the deal. However you may end uup holding the car for months on end. The long turnover time and high price for posting have made many a long time 100% feedback seller like me pursue other pastures.
As a formerly poor shopper… even people looking at the basement of the car range have value in mind. It’s just that they can’t pay more for better values because they can’t. But among the cars that do fit in their limiting budgets, they’re looking for value.
Car Shark- All those Japanese GT cars from the 90s were over the top. I never understood the appeal of any of them. People who wanted a coupe would’ve been better off saving $10-$15K and bought a Nissan 240SX, Mitsubishi Eclipse or Acura Integra or just paid the $38K for an M3.
The 90s Super GT cars were also pretty lousy. I don’t know of any that lasted more than 5 years!
Steven Lang- I wouldn’t buy anything over $2000 from Craigslist- cash only
Carlisimo- I think some buyers might be willing to spend a few extra dollars for a different car or extra features. When I bought my Saturn I went for price. It cost $12500 and only has antilock brakes. 5 spd tranny. No power windows,locks, cruise. I probably could have afforded a mid level Corolla or Civic automatic for around $14K but I wanted the smallest payment.
I’ve embraced all three genres of consumer at times. I realized I was in denial to some degree. Denial is doing anything other than what we rather do most. We all have unique preferences. As value Consumer me, I do not want to sacrifice what matters to me to get a lower price, I rather work hard and/or be grateful for what I can do. I swung to extremes, black and white thinking, and realized I was not happy. Same with quality or price consumer me. I’m looking to do to the best of my ability what will work best for me personally. What will work to make me happy. That means I need to know what I like, consequences and make as balanced a choice as I can, to do what will “truly” work to make me happy. Not buy into the ego ballooning hype or faux gods flung around. I accept what I have and do not have and look at it as part of my life adventure, not as a lack of money, time, etc. Many individuals are disfunctionally out of balance. Were possessions are determinative (like faux gods) of the value of an individual. Many of the car industry is as well. Its a destructive social crisis and one that saddens me. We have worth because we are magnificent spiritual beings, were part of this magnificent universe. Until that is embraced, society will continue to be dysfunctional, and it will be reflected in the choices individuals make.