Automotive Breakfast Club

Value-based Cost of Retail
08:30 a.m. CET


Automotive players have become used to offering large monetary incentives to attract new customers. Budgets planned for the cost of retail can easily top 10 percent of OEM revenue, with a significant portion dedicated to sales support, including direct discounts off MSRP, subsidized financing rates, and free services.

Despite its crucial relevance for both the top and bottom lines, many players are turning to offering discounts as soon as volumes fall below expectations or in response to competitive moves, fueling downward price spirals.

This session highlights a new approach to incentive selection based on customer value perception. With this method, players can reduce their incentive costs without affecting volume or improve market penetration at a constant cost of retail:

This webcast will address the following questions:

  • Customer incentive preferences: How can the customer value of incentives be measured to challenge traditional approaches? How does perceived value compared to incurred costs?
  • Market deployment: What customer segmentation approach would steer incentive spending most effectively? How should dealers and reps in a direct distribution channel react when customers enter their showrooms or access their online stores?
  • Advanced analytics: What techniques or metrics can be used to generate learnings from the massive amount of available data and feed them into the price setting process?

The session will be structured as follows:

  • Simon-Kucher presentation (30 minutes)
  • Q&A (15 minutes)

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