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And You Thought There Was A Markup On Popcorn?

Posted in Posts, and Syllabus Schedule

Mini does something very well that makes a lot of other automakers very, very jealous. Mini sells more accessories and features then anyone else in the industry. Little customization options offered by Mini are a cash cow for the company. Those 300 dollar racing stripes cost next to nothing to produce or apply. With ever shrinking margins a strategy like this makes more and more sense.

Dodge has seen this, and they want in. The new Dodge Dart is about to get a whole host of new packages and options. Want new wheels and badges? That will be $400 please. Hopefully, the additional revenue from these packages and options will help Chrysler make a greater profit on its slow starting (sales wise) Dart.

Using options to increase margins is not limited to “low market” cars however. Porsche is famous (or notorious, depending upon who is writing the check) for its exhaustive list of options. Many are disappointed to learn they will be expected to cough up extra for HID headlights on their $60,000 dollar car. Porsche can also customize your car for you though. Painted wheels, color matched seatbelts, a fire extinguisher in the interior, decals, badges, toolkits, or a number of other things, for a price.×800&RT=1368759312049


  1. tommd13

    Mini has done something very well in that they make the consumer feel they have to have these accessories such as racing stripes, they make it a need instead of just a want. I know my aunt drives a mini and thinks it is so fun, of course she has the racing stripes on it and had to go for the S package as well. Customization is an obvious next step for all automakers and like Tyler I hope the Dart will help boost dodges sales and increase the amount of add-ons they are able to sell.

    When talking with the prof at dinner about the Dodge Dart, I told him I could not stand it because of its commercial. To which he responded, ” But you remember it, right?” Which got me thinking they did do a great job on marketing the car since I have an opinion on the car and I remember the commercial. So my overall thought is that like the Mini the Dodge Dart will sell and since it looks so aggressive accessories will sell with it.

    May 18, 2013
  2. cookg15

    I think customization and personalization is a great way to increase profits in car sales. Making a car feel more unique and tailored to fit an individual is a great way to increase a buyer’s brand loyalty. Customization can also be a great way for companies to try and expand in the Chinese market. As noted in some blog posts about the Mercedes S class, it has some features that are designed to appeal to Chinese consumers, but if Mercedes can find new ways to customize the S class and allow American consumers to feel like they are buying a product that is unique to themselves yet sharing the same quality and style that is popular around the world they will have a car that sells very well.

    May 18, 2013
  3. kuveke

    I hope Professor gets a chance to answer the question I’m about to pose. Here goes. Do people today care more about customization than they did in the past? It certainly seems so. Advertisements about customization appear from Apple to computer games to accessories for backpacks and notebooks. People have always loved to show who they are by buying things, but it seems like in today’s age its a necessity to customize everything you own otherwise you’ll blend in with everyone else. When people aren’t showing who they are by buying a 100,000 dollar car they might want the racing stripes or HID headlights. All car companies should be pushing accessories and even make their customers feel like they need them. But they have to do it in such a way that they don’t lose customers due to their marketing.

    May 18, 2013
  4. 1. Custom packages can be a subtle way to discount a car – if most customers want options then clever packaging can make the price comparison against other cars more favorable, without putting on rebates.

    2. The logic of bundling is something covered in Econ 244. Basically, some people may be willing to buy a bundle but not options individually, so as long as costs on bundle components are low, you can offer individual items or bundled items.

    3. These need not reflect a greater desire to customize, merely a standard way to price differentiate. Customization of one or another form has been with the auto industry since its earliest days. However, the targeting of this in advertising may be greater, so it’s a matter of visibility / marketing strategy not qualitative change. For example, companies would advertise the price of their base models: mechanical windows, no a/c, only a base radio (am no fm) stick shift smallest engine….so everyone added options.

    May 18, 2013

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