Brand Awareness — The Path to Capturing Home Washers
Brand awareness is an abstract concept that enables a person to develop an opinion on the proportion of consumers who are aware of a brand and the proportion that are loyal to it.
Brands have become more important because “everyday low prices” has increased bargaining power with customers. In exchange, customers get lowest price but also fewer choices and less service. Lowest price can attract more customers but doesn’t negate the fact that the importance of customer satisfaction diminishes in companies like Walmart.
When I consult with new investors, I always point to brands like Mike’s Express and Autobell car wash chains. These companies do not compete on low price. Each has “associates” rather than attendants on hand to help customers. Both companies support fundraising, have loyalty programs, and have integrated the physical and virtual experience. Satisfaction is guaranteed.
These factors among others have helped Mike’s and Autobell brands achieve trade area dominance in markets. Brand superiority in the car wash chemical market is less clear.
In 2005, total spending on car wash chemicals was $1.4 billion. The chemical market is highly fragmented with many small regional mixers. Low barriers have allowed bathtub blenders to claim share. National brands comprised less than 15 percent of the total market.
I asked a veteran operator once to explain why national brands did not have the same presence in car washes as they did in retail stores. His response was that many owners believed lowest cost was more important than consumer brand awareness of chemistry.
I learned about this when I had to pay for chemicals. In my case, I inherited a regional mixer and later switched to a national brand that I had used years earlier when operating a detail business.
Was the switch worth it? While it was hard to pay the initial higher price, the increase in average sales made a good return. I also believe brand and marketing materials added a sense of professionalism that customers appreciated.
A similar experience occurred when I participated in the rollout of a nationally branded service package, a system to apply wax, water-repellant treatment, and tire shine. I remember the service selling very well. However, this presents the causality dilemma: was it the brand or the service that actually caused customers to buy?
Although I believe the brand made the difference, I have no analysis to support this. This may be the rub for car wash owners. Because I have an established and loyal customer base, what advantage would I gain by switching over to national brand products? Perhaps the answer is “home washers.”
Today, an estimated 40 percent of motorists still prefer to wash their vehicles at home. In 2010, this amounted to roughly 100 million vehicles.
The difficulty in attracting these motorists may be that car wash owners know their existing customers very well but they may not have the same insight about people who wash vehicles at home. One way to gain some insight is to examine where they buy their car washing supplies.
For example, we would find that the typical person who buys aftermarket car wash products is 35 years or older, middle-to-low-income, and 62 percent earn $60,000 or less.
Over one third of them buy supplies at an auto-parts chain, up from 24 percent in 2005. Fifty-two percent buy their soap and wax at a discount store; 70 percent visit a store once every two or three months; and 50 percent search for products and check prices online.
Eighty-six percent of the aftermarket crowd said their vehicles receive care on a regular basis, up from 79 percent in 2005; 60 percent said the economy has made it more likely they will be keeping their vehicle. Since 2005, the proportion of vehicles aged one to two years dropped from 23 percent to 12 percent and those 10 years and older increased from 14 percent to 19 percent.
Since 2005, the brand and performance of aftermarket car wash products have become twice as important as low price.
Customer service has also become more important: 84 percent of the aftermarket crowd say they would likely return to a store if they received great to outstanding service, up from 66 percent in 2005. Since 2005, the single most important factor influencing this segment has been receiving a recommendation from a qualified professional.
The prospects of attracting home washers to a car wash may be as difficult as convincing grandma that store-bought cookies are better than homemade. Nevertheless, 100 million vehicles represent huge potential for the car wash industry. Brand awareness may be one way to reach them.