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New Product Launches Equal Greater Owner Loyalty

Every calendar year in the third quarter, the automotive industry is filled with excitement as OEM brands launch new model year products. These launches are comprised of new variants (engine, drive types), product refreshes/facelifts, all new product offerings and the next generation of existing models.

In the third quarter of 2012, two Japanese automakers (Honda and Nissan) launched the next generation of their mid-size sedan models. The all new Honda Accord and Nissan Altima boast greater engine power and performance as well as provide greater fuel efficiency versus their previous generations. With the new enhancements and features of these models, as well as a strengthening economy, I decided to take a look into owner model loyalty for these models.

I compared the owner model loyalty of these two models for the months of September-November in 2011 and 2012. This would enable us to compare lift that was achieved from having the new generation versus the previous. Owner loyalty is calculated by assessing all of the Accord and Altima owners that returned to market during the measured time period and reacquired another Accord or Altima.

Loyalty Performance of Newly Launched Products (September-November)

Both newly redesigned models achieved model loyalty over 30%, which was an improvement versus the previous year and generation. The Honda Accord recognized a greater lift (+5.8 percentage points) in model loyalty. However, when you think back to Honda's inventory shortages in 2011, it seems that the Accord model loyalty was understated due to the lack of vehicle availability.

At Polk, we see this pattern of loyalty lift every time a new generation is launched or a model is refreshed. OEMs should review their product launch roadmaps and work toward a strategy where there is a consistent inflow of new product, variants and refreshes introduced into the market, especially during gaps in competitive introductions. These efforts will continue to propel their overall brand and customer loyalty performance.

Posted by Bashar Cholagh, Loyalty Management Practice, Polk (02.19.2013)

Comments for New Product Launches Equal Greater Owner Loyalty

Thursday, February 21, 2013 by wade middleton
Does it matter that the loyalty factor is directed at the brand, or just the model? I can see where both of these cars are more than just a "refresh" and that may impact the loyalty factor.. I would be interested in your impressions of that.
Thursday, February 21, 2013 by bashar cholagh
Wade; thank you for your comment. As a model's loyalty improves these loyal owners are also providing a lift to brand loyalty. In the example above both the Accord and Altima were launched as "all new next generations" Typically we see greater lifts in loyalty from these product launches when compared to minor refreshes/facelifts.

The greatest impact on brand loyalty occurs when OEM's launch a brand new product entry in a segment in which they previously did not compete (An example of this would be Audi A7).

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