Automakers try to reach Gen Y

McClatchy Newspapers (MCT) - Automakers have seen their future, and it consists of 75 million to 80 million Generation Y consumers who shun print ads, zap e-mail marketing efforts, and tune out the costly TV spots that manufacturers have long relied on.

Born mostly between 1981 and 2000 and also known as millennials, this next generation represents a near-baby-boom-size potential bonanza for automakers and dealers. Research shows that Gen Y will be buying 25 percent of new U.S. vehicles purchased by 2010; in a little more than a decade, they'll make up as much as 40 percent of the market.

But to woo them, manufacturers will have to re-engineer their marketing plans as thoroughly as they're revamping their vehicles.

"You've got to be where they are, because they have incredible filters to ignore your message," said Carol Phillips, who teaches at the University of Notre Dame and heads a market research firm that studies millennials. "They're cynical. They believe all advertisers lie."

For millennials, the environment is key, and Phillips said automakers should also market to other associated causes, or "multiple layers of benefit." Gen Y's familiarity with technology also means they're getting information from media that their parents rarely pay attention to.

"They are so different," Phillips said. "They're not consuming the commercial message."

A couple of new studies provide a road map for automakers. The Microsoft "Millennials in Automotive Survey 2009," conducted by Washington D.C.-based KRC Research, was released last month.

According to the report, millennials reported using a wide variety of technology tools in their day-to-day lives. The breakdown:

_ Social-networking sites: 77 percent

_ Instant messaging: 71 percent

_ Wikis (collaborative Web sites like Wikipedia): 59 percent

Half of those surveyed subscribed to more than one social-networking site, 64 percent frequented them daily, and 33 percent reported spending 30 minutes or more for each visit.

"Because of this proclivity toward using technology in their personal lives, millennials have similar preferences in interacting with companies and brands," the report said.

What do millennials want from car companies?

The report says:

_ Ninety-one percent of respondents said it's important for car companies to offer Web sites that give a "full view of purchase options and service history."

_ Eighty-six percent said Web-based auto financing, service requests and customized options such as color were important.

_ Fifty-six percent want to interact with the car companies through instant messaging.

_ Seventy-four percent want to be able to visit blogs hosted by auto companies to post concerns or ask questions.

_ Fifty-two percent want to get mobile alerts regarding new car releases, price drops and more.

_ Forty-four percent want to network with other auto enthusiasts through auto-company-supported social-networking sites, Facebook or MySpace groups.

A group of Texas Tech University business administration students created a marketing plan in connection with a Deloitte Research study, "Connecting With Gen Y: Making Cars Cool Again."

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The Deloitte study, also released last month, underscored millennials' desire for connectivity, style and safety. The Texas Tech students' marketing plan stressed how much social networking and advice from family members and friends counted in buying decisions.

The Texas Tech findings show, for example, that traditional "trust and information sources" don't appeal to Gen Y. According to the Texas Tech students' research, the two least-trusted sources for new-vehicle information are auto salespeople and auto ads.

"They're going to have to do things differently," Alan Whitebread, a professor of marketing and international business in Texas Tech University's Rawls College of Business, who traveled to the recent Detroit auto show with his students to present their findings. "Gen Y is a very difficult group to understand. Gen Y probably splits into more subsegments than any other group."

Phillips said the automakers could take a page from the Barack Obama campaign playbook.

"He hired one of the young founders of Facebook early on," Phillips said. "He really made the social network work for him. He allowed himself to get invited in.

"They're not interested in taking text messages," Phillips said of Gen Y'ers. "But they took Obama's text messages."

Or, as the Texas Tech students put it in their executive summary:

"Throw everything you've done that worked in the past to the wind; online Web sites and live music events are the best venues for interaction; don't just know who we are, be who we are; be different; offer an experience."

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For all their differences, millennials do love cars.

And catering to the demographic's desire to be connected at all times, the automakers are giving them more to like than ever.

Ford, for example, is offering a mind-boggling array of media features, including voice-activated satellite radio option that stores up to 3,300 songs.

All the driver has to do is say the artist's name, and bingo, Beyonce's on. There's also an option that will read text messages to the driver.

Alan Mulally, Ford president and CEO, also underscored the company's push to be a tech leader by making the keynote address at the recent Consumer Electronics Show.

"What we're making is the ultimate mobile device," said Scott Monty, head of social media for Ford Motor Co., who was calling on his voice-activated Sync mobile phone and digital music system.

Still, to move the products, they've got to appeal to folks like Mark Scott and Josh Eccleston.

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Both 21, the Grapevine, Texas, residents are such gearheads that they hit the Greater Tarrant County Auto Show in Fort Worth last month to get an unobstructed view and take pictures of the new models.

"We're super-big car enthusiasts," Scott said. "That's why we're here early."

But the two young men's attitudes toward the industry are textbook Gen Y.

Eccleston, who owns a Jeep Wrangler and a Toyota MR2 turbo, said the car company that had really gotten his attention recently was Chevrolet.

The bow-tie brand didn't do it with TV spots, but with a company-sponsored racing rally where he got to drive a Cobalt SS and an Impala.

"You paid $50, and they taught you how to race," he said. "It was really great."

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And he learned about the event from a friend's dad, not an ad.

According to Phillips, millennials put a lot of stock in the opinions of parents as well as friends.

"This is the first generation that doesn't hate their parents," Phillips said. "They listen to their parents, especially on big purchases. They are not going to buy a car unless they talk to everybody they know."

Of course, one reason they listen is that they might need some help in paying for that new set of wheels.

"I think it's all about financing," Phillips said. "They have to finance it."

She's also recommending offering alternatives to ownership, possibly taking a cue from the Zipcar rental model.

"They've got huge debts," Phillips said. "But they still need transportation."

The Texas Tech study supported the idea that they may also need financial help, especially with the economy in the weeds.

Nearly 33 percent of those surveyed said they couldn't afford a car costing more than $13,650, even with a job paying $42,000 a year. Forty two percent figured they might be able to swing a vehicle costing $22,500 on that same salary. Gen X buyers, however, may want something more.

"We may have created our own problem," said Whitebread, whose Gen Y daughter just graduated from college. "They want a lot of things."

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HOW SOME BRANDS ARE MARKETING TO MILLENNIALS:

_ BMW: Its Clive Owen Internet-only short films, directed by the likes of Guy Ritchie and featuring performers such as Madonna and James Brown, created a huge buzz for the brand and reportedly gave BMW an appreciable sales bump. The films _ the series was titled "The Hire" _ are still available on the Internet.

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_ Hyundai: The Hyundai Assurance Program, the first of its kind in the U.S. industry, allows customers to walk away from their auto loan when "certain adverse life events occur, providing protection from financial shortfalls that arise from vehicle depreciation up to $7,500." In other words, if you lose your job, at least you're not completely hosed on the car deal.

_ Mercedes-Benz: Last spring launched a social-networking site, Generation Benz. It offers early peeks at new models. And to make sure only the cool kids get in, the site excludes anybody whose registration info indicates that they're too old. Apparently only kids are cool enough to get into Generation Benz. "They think of themselves as value shoppers," Phillips said. "They would buy it (Mercedes) because it's just a good car."

Source: Fort Worth Star-Telegram

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© 2009, Fort Worth Star-Telegram.