Unlike other car companies, Saturn is a franchise dealer. Other car companies sell their manufactured cars to dealers who in many cases sell many different brands of cars on one lot. With this kind of car-selling, a consumer may go to a lot and look at many different brands of cars. This causes a high level of negotiation and haggling over prices. This is in part because a customer may choose the cheaper car brand, but the dealer will add onto the price through add-ons. Also, because there is intra-brand competition, on dealer may sell a Honda Civic for one price while another dealer may sell it at a lower price, and then possibly next week both lots have a "blow-out sale."" Saturn removes this practice through a market area approach.
Saturn's motto is "Saturns are bought not sold."" Through a market area approach, Saturn is able to implement a "one-price- selling strategy. Saturn has given dealers a much larger trading area than other manufacturers, and encourages its retailers to open multiple facilities within their own market area. This cuts down on intra-brand competition such as I discussed in the example above where "several dealers in the same area are carrying the same product within short distances of each other. This creates an environment for intense price competition among dealers carrying the same product line, which in extreme, will drive their profits to zero. In fact, during 1989 and 1990 dealers on average made negative profits on new car sales because of intense price competition engendered by low demand."" This kind of competition is one of the very sources of customer dissatisfaction.
Saturn saves money in their dealerships because their sales consultants do not waste their time with negotiations. In fact, ½ to 1/3 of Saturn employees have no prior experience selling cars. Saturn is about people, and they believe that is what drives the company. Saturn works to encourage "customer enthusiasm in retail employees.
