Volatility in autos – and the demise of brand loyalty

Any casual observer to the auto industry can sense that brand loyalty has been declining. But the following graphic, posted in today’s NY Times (http://www.nytimes.com/2009/10/21/business/21auto.html) illustrates how dramatic the decline has been:

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So what does this mean for strategy? Clearly, this has interesting implications for marketing (does it mean you have to do more advertising or less?).  But it also has interesting implications for operations. Logic suggests that if brand loyalty decreases, market shares should be more volatile – customers will move quickly to products they like and then just as fast they will move away to another brand’s products. It would seem that this places an extra premium on flexibility – it should become (or has become) harder to predict a model’s market share, and so flexible capacity is needed to manage the unavoidable demand-supply mismatches.  Throw in uncertainty in the economy, fuel prices, and the diffusion rate of green transportation and you have a very challenging environment ahead – as if we didn’t know that.

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3 Responses to Volatility in autos – and the demise of brand loyalty

  1. kahuna says:

    Information is perfect, give answers and find the most appropriate solution of the problem that I encountered during this

  2. Cars Ireland says:

    Our economy has nose dived here in Ireland so if anybody is buying a car they are not going by brand now its whether they can afford a car. So most dealers and manufacturers have slashed their marketing budgets and have started to move over to internet marketing

  3. Very interesting your article. Thanks for the information.

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