Stick to your Gunn: a strategic move worth millions in advertising

Bold moves pay off! Gunn Automotive has had a longstanding reputation as a customer-driven dealer. But back in the early 90’s, competition was increasing. Even though Gunn had a good business, they realized that in the long term, being clearly different from other stores was going to be necessary to maintain their profitability.

“The questions we asked ourselves were: what can we do to be who we are in a more radical way? And what’s wrong with our industry?” says Paul Young, Gunn’s Executive Vice-President, and one of the architects of the change. They realized that the way the business was done was not fair to everybody: the person with the best negotiating skills would get the best deal. A lot of people would actually appreciate not to have to battle to buy a car. That’s how the bold idea of a fixed price, not negotiated, just like other retail companies, came up.

For two years, they researched the question, visiting other dealers in the US who were using a similar approach, and conducting research with their own customers. At the end of the process, they had a strategy: fixed price for new cars, used cars, and for trade-ins. No negotiation. They also changed the way they paid their salespeople, giving them a fix salary so they would not have an incentive to play with the price. Finally they decided that they wouldn’t implement the idea in small test runs , they either did it or not.

14 years later, they still claim “One Simple Price” as the single most differentiating element of their dealerships. It’s clearly on top of their communications. Their market share and profitability have grown consistently over the years. More dramatic is the fact that they are the second largest automotive dealer in the county, while ranking number 8 in advertising expenses.
The lesson: A marketing strategy that meets the needs of your customers in a radical and unique way is worth a lot of advertising dollars. It’s easy to say but takes a lot of guts. I am curious to see what Gunn’s next move is going to be in this changing market, in order to continue to be a radical marketer in the dealers’ field.

Questions: how do you create difference from your competition by being completely customer driven? Have you ever asked your customers what’s wrong with your industry?

©2009, Gerard Migeon Inc., Signal, www.signalarity.com

Marketing or advertising?

In our very media-driven culture, marketing is often confused with advertising. Many companies think they don’t do much marketing because they don’t publish any ads or have many glossy brochures sitting on their shelves.

An honest CEO of a small company asked me what the difference was between the two. For some reason, unrelated to him, a military example came to my mind. I explained that a CEO does marketing like a General plans for the war, decides what battles to take, which troups to send to these battles, where he would attack the ennemy and when he would claim victory or retreat, maybe even what artillery he would use. The kind of ammunitions the soldiers would use, and the frequency of the shots, that is advertising.

In more literal words, marketing is any plan and decision that defines how the company is going to operate based on its understanding of the market, from the markets where the company is going to play, the customers it’s going to serve, why and how, the depth or width of product range it will offer, the way it will communicate to the customers, etc..Advertising is the tactical part (even when it is strategically planned): what we say at a given time, to create a purchase decision by the customer down the line.
The CEO whom I was talking to had made a very important marketing decision without calling it such. He had focused all his efforts to a certain group of customers, turning down others. By doing so, he created such a reputation and an ability to serve them better that he used very little advertising to grow. ©2009, Gerard Migeon Inc., Signal, www.signalarity.com