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