AUTOMOTIVE D I G I TA L
FUTURES
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CONTENTS
4/ A new journey: Shifting from dealer-centric to customer-centric selling
10/ Swiping the past away: How technology is transforming the concept of car ownership
16/ Reimagining the showroom: The future of automotive retail
22/ Faulty connection: Unlocking the huge potential of connected cars
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26/ Survey: In-car offers and promotions 30/ Green shoots: Using digital to forge consumer faith in electric vehicles
36/ Communicating the revolution: Examining the new wave of auto campaigns
40/ Survey: Additional car services 44/ Solving the Millennial mystery: A five-step guide to reaching young drivers
SEPTEMBER 2015
welcome The automotive industry has been hit hard by changing consumer habits, powered by the energetic and ever-evolving digital landscape. At AnalogFolk we pride ourselves on our understanding of how these developments can be harnessed to create valuable interactive experiences, and, in turn, business transformation. In this report – using our wealth of automotive experience – we explore the critical trends impacting the car industry, and offer solutions you can adopt to achieve commercial success.
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A NEW JOUR NEY: Shifting from dealer-centric to customer-centric selling Slumped in a seat, drinking her third cup of low-grade complimentary coffee, the customer glances at her watch to see that nearly 45 minutes have passed since she first arrived at the car dealership. As she flicks through her Facebook feed, one of the employees calls over to assure her that ‘Dave’ is on his way.
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When Dave finally arrives to greet the car-buyer, he comes with news that some of the specifications she requested are not currently available, and that there are extra charges for the particular in-car entertainment system she has requested. Oh, and the car itself will not be ready to pick up for another week due to a mix-up at head office. Such a frustrating scenario is drearily familiar to many UK car buyers. In a marketplace where consumers are increasingly able to set the terms for their shopping experience, the car buying process has remained resolutely rooted in the adversarial negotiation rituals of old.
Car companies created sales and marketing structures to fit the so-called purchase ‘funnel’, wherein consumers steadily whittled down the number of brands under consideration. However, the introduction of digital, mobile and social media communications is widely considered to have rendered this method obsolete. McKinsey, for instance, advocates a ‘circular’ model with a ‘loyalty loop’.
Digital technology is key to creating a purchase journey that matches changing consumers’ behavioural habits. Take the initial ‘discovery’ phase: as with almost all largescale purchases, the bulk of preparatory research carried out by customers has moved online, and in particular to mobile devices. According to a 2014 study by AutoTrader.com, buyers of new and used cars spend three-quarters of their product search time online, up from 62% in 2011, while the figure rises to 82% for the younger Millennial generation. On average, buyers visited nine websites per purchase, and two-thirds arrived at the showroom knowing exactly which model of car or van they wished to buy. Google has encountered a similar pattern. In its 2013 automotive report, the search giant found that buyers in the market for a new vehicle encountered an average of 24 digital touch points, including review sites, online videos and social media feeds. Nearly half of respondents (42%) checked the price of vehicles using their smartphones in the weeks leading up to a purchase, while 36% reviewed the description of a model. A mobile-optimised research experience is vital.
DISCOVERY
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In a marketplace where consumers are increasingly able to set the terms for their shopping experience, the car buying process has remained resolutely rooted in the adversarial negotiation rituals of old.
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C O N S I D E R AT I O N 6
Once consumers have reached the next ‘consideration’ phase, they must be offered the right tools to find the right product. Auto brands have spent large sums in optimising websites to work across devices, and boosted the sophistication of digital marketing campaigns, all of which is well-received by consumers. If anything, they should go further. Analysis carried out last year by management consultancy Arthur D. Little said that 60% of consumers view interactive configuration tools, allowing users to select combinations of colour and accessories, as “very important” to the decision-making process. Technology can also be used to enhance the one-to-one contact between brand and consumer in the real world. Rather than expecting people to go out of their way to visit a showroom, Hyundai brought the showroom to one of South-East England’s busiest shopping malls, Bluewater in Kent. The Rockar Hyundai ‘digital automotive retail experience’ entices people as they are shopping for new clothes and gadgets, offering an immersive Apple Store-style experience. Around 500 people now pass through the outlet each day. Crucially, the majority (54%) of visitors have also been female, while the new showroom has also resulted in a 92% conversion rate to the brand.
Auto brands have spent large sums in optimising websites to work across devices, and boosted the sophistication of digital marketing campaigns, all of which is well-received by consumers. If anything, they should go further.
TRIAL
Once customers are ready to ‘trial’ the product, car companies should look beyond the ritual of the test drive. As outlined in the feature on the future of automotive retail (page 16), Audi has invested significantly in virtual reality services for its chain of inner-city showrooms. With the smaller floor space only able to host three or four actual cars, the Volkswagen-owned brand uses digital technology to showcase its range of products, as well as how they may be personalised. This “showroom in a suitcase” could eventually be brought to people’s homes and places of work, eliminating the need for consumers to visit dealerships at all.
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PURCHASE 8
Despite all these improvements to digital experiences in the early stages, there has been a distinct dearth of innovation around the ‘purchase’ phase of the consumer journey. Indeed, market research provider Frost & Sullivan claims that, even by 2020, only 5% of cars will actually be sold online. There is undoubtedly a growing willingness to buy cars through the internet. Consultancy firm Capgemini found that 28% of UK consumers see themselves as ‘likely’ to purchase a vehicle online, up 4% year-on-year. That figure trails the willingness found in markets such as the US (34%) and China (61%), suggesting the viewpoint is likely to become more common. Buying online for used cars has gained greater traction in recent times, and start-ups are seeking to find ways to make it easier and more secure for customers. Apps such as Vroom and Beepi have created online marketplaces for US drivers to buy and sell, with investors taking a keen interest in the trend – Vroom, for example, raised $54m in a fundraising drive this summer.
Just as online marketplaces like Amazon and eBay have become trusted intermediaries between buyers and sellers, intervening when necessary to resolve disputes, the apps promise to inspect all vehicles before reselling them. They also allow users up to 10 days to decide whether they are happy with the product, or wish for a full refund. Entrenched new car sales channels and networks have prevented manufacturers from fully committing to ecommerce, while the modest success of previous UK upstarts Virgin Cars and Jamjarcars has also added caution to online strategies. A new UK business, called Carwow, is positioning itself as the Expedia of the automotive sector. Carwow helps users to choose their preferred car, and then passes the lead on to 1,000 participating dealerships to seal the deal. It eliminates the need for onerous negotiations, although requires users to interact directly with traditional automotive retail outlets.
OWNERSHIP
Once the purchase has been completed, a new consumer journey begins, with judgements being made about the quality of after-sales service. As we observe in the next feature on the future of car ownership, mobile apps can be used to enhance the consumer experience and encourage a greater level of dialogue between driver and car maker. Digital services offering maintenance and support will help foster loyalty and boost the brand when the consumer is ready to purchase a new vehicle.
Car buyers have grown accustomed to feeling in control when shopping, be it online or in a physical store. Yet, when it comes to buying a car, the actual purchase is still largely determined by how car companies want to do business.
Digital services offering maintenance and support will help foster loyalty and boost the brand when the consumer is ready to purchase a new vehicle. Rather than hoping to augment existing retail networks with websites and apps, motor brands are realising they must fundamentally transform the way they sell to consumers. By combining digital innovation, including enabling direct online sales, with a more consumer-centric approach to real-world retail, automotive companies can generate the same brand love and loyalty enjoyed by other technology firms. The product is not the problem. Offer a new buying and ownership journey around ideal needs of consumers, and increased sales will undoubtedly follow. #
Motor brands are realising they must fundamentally transform the way they sell to consumers.
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How technology is transforming the concept of car ownership
A quick swipe of the thumb and the taxi is on its way. It arrives only a minute or two later, transports the customer to the designated destination, and all for a reasonable price. It is a seductively simple proposition – and one which poses serious questions about the future necessity of mass personal vehicle ownership. Taxi app brands like Uber and Lyft have risen to remarkable prominence over the past few years. Uber alone has already raised a staggering $10bn in funding, ahead of its anticipated stock market flotation. It has expanded its operations to over 300 cities worldwide, and claims to transport millions of consumers each day. The bubble may burst, of course. Uber has faced increasing levels of resistance from local authorities and been subject to several scandals over the behaviour of its drivers. But, irrespective of Uber’s long-term performance, a seed has been planted in the minds of consumers that they need not own a car to achieve affordable mobility.
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A recent report by The Economist, ‘From horseless to driverless’, speculates that urban areas will one day be dominated by driverless “taxibots” that consumers share for cross-city transport at a fraction of current travel costs. It cites cost, safety, and traffic reduction reasons for what it believes will be a wholesale change in mobility habits. Despite being the costliest item that most consumers own, The Economist points out that, on average, most cars are in use less than 5% of the time. It predicts a future in which carmakers sell vehicles for fleet operators, rather than to individual drivers. And just as the car evolved far from its origins as the ‘horseless carriage’, the driverless vehicle will take on a radical new identity to suit its futuristic uses, claims the report.
The provocative article accuses car industry executives of being in “denial” over the popularity of personal ownership and, increasingly, car leasing schemes. If auto brands are looking for a way to fight back, ironically it’s one of Uber’s recent innovations that may offer a clue about how to appeal to smartphone-obsessed consumers disinterested in full car ownership. UberPool allows passengers to ride and split the cost with another person that has requested a trip along a similar route. In typical Silicon Valley-speak, Uber describes the initiative as a “bold social experiment”. Nevertheless, it is true to say such schemes may instigate a lasting change in consumer behaviour. The so-called ‘sharing economy’ came to motoring some time ago. Zipcar, the most well-known car-sharing membership programme, was set up 15 years ago. Now owned by car rental giant Avis, Zipcar still has around a million members across the globe and boasts a dedicated following on the West Coast of the US.
A Mintel survey of UK drivers carried out in 2013 shows that, though just over a quarter of people (26%) are turned off by the idea of car-sharing services, the majority (52%) would consider taking part in locally-available programmes for reasons as diverse as saving money and helping the environment. Some auto makers have already identified the potential for branded car-sharing services – notably ones which offer a sense of ownership, but for a fraction of the usual price. Since last year, Swedish consumers have been able to come together to share ownership of an Audi. The company’s new Audi Unite programme allows four users to share a car for up to two years, using an app to manage access. From the A1 to the R8, the majority of Audi’s range is available to users, while rental, insurance and maintenance expenses are bundled into a monthly fee. As we discuss in the connected car article (page 22), in-car technology is developing fast. From a digital dashboard, users can track their vehicle, manage how best to split costs and measure their own usage of the car from data gathered via an Audi Unite ‘beacon’. The brand charges for the benefit, not for the product. Such innovations transform the relationship car manufacturers have with drivers from an annual catch-up, based around product maintenance, to a weekly or even daily interaction, where brands are constantly helping customers to manage their mobility. It also fits a wider trend of technology brands evolving their business models away from hardware production, and towards a greater emphasis on services. Just as companies like Dell have developed service offerings as PC and
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laptop sales have declined, so too must automotive firms contemplate how to add greater value in a world where not every consumer will want to own a vehicle. It is unrealistic for car makers to expect the nearubiquitous personal vehicle ownership of old. For some consumers, occasional access is enough, as proved by the success of sharing schemes like Zipcar and the popularity of taxi apps such as Uber.
AUTOMOTIVE FIRMS MUST CONTEMPLATE HOW TO ADD GREATER VALUE IN A WORLD WHERE NOT EVERY CONSUMER WILL WANT TO OWN A VEHICLE.
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Automotive brands must drastically rethink the role they occupy in consumers’ lives, and conceive new long-term strategies centred on user-oriented digital services, using data to optimise the experience. They may not get it right first time; the smart approach is to embrace an ethos of continuous improvement through testing and learning. This is the motor industry’s Kodak moment. Kodak thought it sold film and cameras. It didn’t – it sold the ability to capture and share memories as pictures. In the same way, car manufacturers need to keep in mind that they are in the business of providing personal mobility. As technology improves, shared mobility options will become easier. And, as this happens, car companies will need to behave more like service brands. The future is only a finger swipe away; it could prove disastrous to any car brands caught on the wrong side of this revolution. #
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The future of automotive retail
Those car buyers, they are a-changin’. Armed with statistics and reviews found online, and expecting a seamless experience, even the least clued-up consumers arrive at dealerships with high demands. Car companies face a modernisation race to keep up with the changing man and woman behind the wheel. It used to be so simple. Consumers would “shop around” by visiting five or six retail outlets, before making their final decision about which car to buy. While management consultancy McKinsey suggests four-fifths still like to try-before-they-buy, customers now visit dealers on average only once in the build-up to a purchase.
At the crux of the issue is consumer dissatisfaction with car companies’ traditional retail offerings. An Autotrader report from earlier this year found that only 0.4% of US consumers are happy with the current car buying process, and over half (53%) would buy a vehicle more often if the process were improved. That is not to say consumers take their outlay on a new car any less seriously. According to a recent Ernst & Young (EY) report, consumers spend an average of 10 hours conducting online research – more time than for any other major product, including smartphones and financial services – and 80% of respondents claimed to use multiple devices to seek out information.
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Like businesses of all kinds, car manufacturers must adapt their retail approach to match consumers’ increasingly busy lives, both in the real and digital world. At a bare minimum, as the EY research suggests, automotive companies must ensure that they offer engaging online experiences across desktop, tablet and mobile devices. But to win, brands must go much further. In this day and age, companies simply cannot guarantee that consumers will take time out of work and home life to visit a dealership. The basic premise of a showroom visit is still valuable. But as consumer expectations rise, and technology develops, the showroom is becoming a more flexible concept. We have identified three key trends that are being trialled.
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Car manufacturers must adapt their retail approach to match consumers’ increasingly busy lives, both in the real and digital world.
The results were striking: the Live Store attracted an average of 465,000 monthly users and around 280 live video chats
per day during the campaign. More importantly, 67.4% of the video chats led to real-world interactions in the form of test drives – contributing to a 19.3% year-on-year increase in Fiat test drives in the region.
THE REMOTE SHOWROOM
In 2013, Fiat launched ‘Live Store’, the world’s first ‘point-of-view’ car dealership. For 12 hours a day, Brazilian internet users could log on to take personalised, real-time trips around a Fiat showroom, guided by an expert wearing an eye-level camera. The Fiat expert would answer users’ questions about each vehicle and – if impressed – customers could arrange a test drive at their local dealer.
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To get closer to consumers, Volkswagenowned luxury car maker Audi marque is busy expanding its chain of Audi City dealerships, with prominent “downtown” sites already open in Moscow, London, Beijing and Berlin. Yet, while these urban outlets may improve footfall, the cost and availability of land means such showrooms are smaller and allow for a shrinking number of models to be displayed. Audi believes it may have found an answer to this conundrum with virtual reality (VR), a hot topic in the technology world. If ever proof were needed of the growing excitement around VR, consider Facebook’s $2bn acquisition of the maker of Oculus Rift VR headsets and Microsoft’s excitement about the “mixed reality” HoloLens gadget. Which brings us to our third trend...
THE NEW-MODEL RETAIL SHOWROOM
Even those consumers willing to make the trip to a car dealership are loath to travel far from their daily path, particularly in cities. Urban populations are on the rise across the globe – the World Health Organization estimates that, by 2017, the majority of people across the planet will be dwelling in cities. Particularly in Western markets, convenience store culture has bred a new type of urban shopper.
THE MOBILE SHOWROOM
Nicknamed the “dealership in a briefcase”, the Audi VR experience allows prospective customers to configure their ideal car using a specially designed headset. Wearers can sit behind the wheel and view the car in three-dimensions, with life-like sounds provided by Bang & Olufsen to enrich the experience. The full range of models, with all imaginable colours and specifications, can be accessed, something previously unrealistic even in the biggest of showrooms. Under the direction of Audi’s global sales and marketing head, Luca de Meo, the first dealerships will introduce the VR experience by the end of 2015. And the brand is already plotting the development of a mobile solution to allow consumers to virtually test vehicles using their own Oculus Rift or HoloLens at home. Getting consumers to trial a car is still the number one priority. But that no longer has to mean them getting behind the wheel of a car at their local dealership. The more compelling and realistic these experiences become, the bigger the long-term prize in terms of sales leads and conversions. #
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CONNECTION 22
The YouTube clip is almost comically understated. To showcase his new Apple Watch app, capable of controlling a Tesla Model S electric vehicle, millionaire developer Allen Wong honks the car’s horn and flashes its lights. For fans of 1980s television, imagine a really uneventful episode of David Hasselhoff’s Knight Rider – with a much better wristwatch.
The implications are nonetheless profound for car makers, but only if they learn the right lessons about in-vehicle digital technology meeting consumer needs. The concept of the ‘connected car’ is nothing new, of course. You have to go back eight long years, to the 2007 Detroit Motor Show, for Ford’s grand unveiling of its first major crack at car connectivity, the much-vaunted ‘SYNC’ partnership with Microsoft.
And the connected car is becoming ever-more commonplace, across both luxury and mid-market segments. A Business Insider (BI) study estimates that, by the end of the decade, 75% of cars shipped globally will be built with the necessary hardware to connect to the internet.
However, the BI report throws up more troubling findings for auto manufacturers – none more so than the suggestion that consumers are yet to find this rush towards connectivity especially useful.
Unlocking the huge potential of connected cars
Trust is part of the problem.
Not all technology catches on immediately. Take internet-enabled televisions: the technology itself has been around for several years, but only with the all-important combination of utility, content and service offered by providers like Netflix and Amazon Prime have consumers embraced internetenabled TV. Wearable technology may also be in the middle of the lag between capability and compelling proposition, when mass uptake becomes a reality.
So what can motor firms do to get over this line? Over half of respondents to the BI survey like the idea of streaming music, surfing the web and avoiding upcoming traffic jams through in-car connectivity. Yet, even by the end of the decade, only an estimated 40% of drivers say they will activate connected services available within their vehicles.
Trust is part of the problem. A 2013 report by Mintel revealed that onein-five US drivers (18%) worry about potential software bugs in infotainment or navigation systems, while 10% believe multimedia systems like MyFord Touch or Toyota Entune are “too complicated”. Incidents like Fiat Chrysler’s recent recall of 1.4 million vehicles after an alleged hack through the car infotainment system do nothing to abate those fears.
Is the problem technology itself? Do drivers desire the good old days of basic motoring, when the most advanced piece of technology was the cassette tape player? Almost certainly not. Today’s
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consumers enjoy access to digital services in all other elements of life, but they are yet to understand the value of such experiences in their cars. A major step in the right direction would be to ensure that in-car digital technology complements and interacts with drivers’ smartphones. For instance, a quarter of respondents to the aforementioned Mintel report want to be able to use their mobile phone’s Apple Maps, Google Maps or Bing Maps on their vehicle display. Specifically looking at Millennials, that figure rises to 39%. Consumers enjoy new gadgets, but they also demand ease of utility.
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Today’s consumers enjoy access to digital services in all other elements of life, but they are yet understand the value of such experiences in their cars. Auto brands must work harder to emphasise the usefulness and value of connected car technology, and this can only be achieved by looking outside the walls of the automotive industry. Manufacturers need their car to be part of an ecosystem of applications and services, leveraging the platform that the connected car provides. They must embrace innovations from all around the world of technology. A good example can be found in a promotional video for Google-owned smart thermostat maker Nest, outlining its compatibility with other devices. Former Mercedes-Benz R&D North America CEO Johann Jungwirth explains that its cars can be connected to driver’s Nest thermostat,
predicting an arrival time and ensuring heating levels are optimum for when the consumer arrives home – a palpable benefit for any user. Tesla is attempting to dial up the practical value of its own connectivity offering. The company’s founder Elon Musk has attempted to tackle the “range anxiety” felt by some drivers of electric cars, worried they will become stranded with an empty battery. An ‘over-the-air’ software upgrade issued in March allows the vehicle to alert drivers when they are out of range of charging stations, helping them to make smarter decisions. The adoption of connected cars will be driven by manufacturers who understand the needs of drivers while they are on-the-go. Smart brands will open up the car as a platform to a wider network of partners, help those partners deliver a consistently great user experience, and wait for consumers to lap it up with as much gusto as they have mobile and tablet technology. #
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WOULD YOU WELCOME PERSONALISED, LOCATIONBASED OFFERS AND PROMOTIONS THROUGH A CAR’S DISPLAY?
Driven by access to larger pools of data than ever before, marketers have become increasingly reliant on hyper-personalised, location-based marketing. With that in mind, we set out to find if cars can become the next channel by which these messages are delivered. Personalised marketing is nothing new. It used to simply come in the form of mailed coupons, promoting deals on items that you regularly purchased. Fast forward to the digital revolution, and along came targeted online ads based on recently viewed products, social media profiles and websites visited, amongst other behavioural and demographic parameters. The latest advancement in delivering personalised marketing comes in the form of iBeacons. With their relatively cheap setup and maintenance costs, they offer marketers and businesses the chance to communicate with customers on the most personal level yet – via their smartphones whilst they are in-store, where actions can be taken immediately. The point is: people encounter personalised marketing almost everyday. But are they ready to start receiving those messages through their car? Would they welcome intrusions into their personal sanctuary where it’s often acceptable to sing along loudly and badly to Taylor Swift? 42% of our respondents would.
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54.27%
Would you welcome personalised, location-based offers and promotions through a car’s display?
27.27% 43.78%
Despite being a minority, this is a significant percentage that demonstrates a real appetite for the use of cars as a marketing channel. But what’s even more significant is the difference of opinion between age groups. 54% of respondents between 18 and 34 would welcome personalised, location-based offers through a car display – far and away the highest of any age group. What we’re seeing is a younger generation who have grown up surrounded by personalised marketing and are more aware of the value it can provide – whether it’s a
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promotion on those shoes you like, or cheaper tickets on that flight you just looked at. For them, the value exchange is clear and beneficial, making them more interested in receiving these messages through increasingly personal channels. So it’s all looking very promising for marketers who plan to target a new generation of car owners. Young people are more open to receiving hyper-targeted communications through innovative new channels and less worried than previous generations about the usage of their private data. But there’s a catch. In return, they will be expecting marketers to move beyond basic demographic segmentation to deliver in-car messages that are valuable and personal to them and where they are.#
35-54
55+
72.73%
56.22%
45.73%
18-34
NO
July 2015 / Toluna QuickSurvey, 500 UK adults.
Using digital to forge consumer faith in electric vehicles 30
Climate change has slipped from the front page. From the highpoint of the green debate a decade ago, media interest in the future of the planet has diminished of late. From the initial splash made by Toyota’s Prius hybrid electric vehicle – which has accumulated around five million sales since its introduction in 1997 – the tidal wave of electric and hybrid car purchases has also failed to materialise. Led by models such as the Nissan LEAF and BMW i3, it had been predicted that global electric vehicles (EV) sales would reach 10% of the industry total by 2020, but this growth has stalled. A US target of a million EV sales by the end of 2015 looks unlikely to be reached; meanwhile, only an estimated 14,000 have been sold to date in Germany. So what is the problem? Are car companies, under pressure from governments and the green lobby, producing products that consumers do not desire? In the UK, at least, there is some cause for optimism. According to Mintel’s ‘UK Car Review: An Insight into Brand Preferences and Market Trends’, over a quarter of respondents (26%) agree with the statement that “environmental concerns are important when choosing a car”. Some 29% of British car owners said they would be interested in selecting a hybrid car for their next vehicle purchase, while drivers in London score even higher in their environmental concerns when picking a car (32%). Female drivers are more likely to consider the environment in the car buying process than their male counterparts, and a far higher proportion of women desire a car to match their lifestyle needs (57%). Some momentum does seem to be growing. Europe’s EV market grew by 37% last year, though electric cars
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only make up 0.6% of overall new car registrations. In the UK, buoyed by government subsidies and tax exemptions on such products, drivers registered 35,000 electric and hybrid cars in the first half of 2015 – up 350% year-on-year. The Society of Motor Manufacturers and Traders (SMMT) also claims that the UK beat its CO2 emissions targets for the previous year, with the average new car in 2014 posting CO2 emissions 4.2% below the European Union’s target of 130g/km. In combination with government policy, the automotive industry is leading the way in facilitating lower emissions and ensuring a greener motoring future. However, steps must still be taken to accelerate the rate at which hybrids and EVs are purchased.
32 TESLA WISHES TO BE THE BEST PRODUCT IN A LARGE INDUSTRY, NOT SIMPLY THE ONLY PRODUCT IN A NICHE ONE.
One approach, embraced by brands such as Tesla and Toyota, is to open up their patents to rival firms, in the hope of growing the overall market. Tesla’s chief executive Elon Musk last year pledged to unlock the company’s entire patent portfolio and treat it as ‘open source’ information for anyone with positive intentions. Musk said he wanted to remove “intellectual property landmines” inhibiting the development of EV technology, and that the market would benefit from a “common, rapidly-evolving” platform. In the words of Silicon Valley entrepreneur Aaron Levie, the CEO of file-storing company Box Inc, Tesla wishes to be the best product in a large industry, not simply the only product in a niche one.
Toyota followed suit earlier this year with the decision to offer unrestricted access to thousands of hydrogen fuel cell patents, as part of its plan to push the technology as an alternative to pure EVs. Its Mirai hydrogen fuel cell vehicle is due to go into production later this year, and the Japanese marque hopes to grow the category with the open approach to patents. The biggest obstacle for manufacturers to tackle, however, is that of “range anxiety” – the fears harboured by many drivers that they will run out of juice outside the range of an EV charging point. Significant work has gone into bolstering battery life times and improving the charging infrastructure across the UK. According to government figures, there are around 7,000 charge points in the country across 3,000 locations – 500 of which are ‘super-chargers’, offering a 50% charge in little over quarter of an hour.
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Yet, for consumers unwilling and unable to take much time out of their day, the idea of planning a charge session in excess of 30 minutes is extremely undesirable. Industry experts have also bemoaned the lack of comprehensive information around charge point locations, and whether they are readily available for all motorists. Digital technology cannot solve the challenge of infrastructure. What it can do, however, is boost confidence and brand preference by helping customers to manage challenges around planning and range fear. Services like range planners and information portals about charge point queue times would be a good start.
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A sizeable minority of drivers in the UK and beyond are still open to considering environmental concerns when purchasing a new car. And the best way to cultivate this demand is by getting the EV experience as close as possible to the freedom offered by petrol cars. Achieve this, and all things green will be back on the front pages. #
DIGITAL TECHNOLOGY CANNOT SOLVE THE CHALLENGE OF INFRASTRUCTURE. WHAT IT CAN DO, HOWEVER, IS BOOST CONFIDENCE AND BRAND PREFERENCE BY HELPING CUSTOMERS TO MANAGE CHALLENGES AROUND PLANNING AND RANGE FEAR.
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EXAMINING THE NEW WAVE OF AUTO CAMPAIGNS
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Marketing is changing. It is becoming more multi-layered, and its influence is more far-reaching across all elements of a business. Car companies are moving into a new era of communications ideas, ones that offer depth and a richness of experience to prospective customers. So far in this report we have considered the changing ways in which consumers are buying vehicles, and how they use their cars once they become owners. Yet, before it reaches this point, the marketing director or CMO of a motor manufacturer must devise a plan to ensure his or her brand is even considered for purchase.
This is by no means easy. Despite government bailouts and takeovers galore in the past decade, the number of motor brands on offer to consumers has grown rather than shrunk. And the shift to online communications has seen no great reduction in advertising spend: eMarketer predicts the US auto industry alone will spend over $7bn on digital media this year, rising to $12bn by 2019. The level of market noise has grown deafening. Only by a smart blend of interactive communications can companies successfully deliver awareness and engagement.
Lessons can be learned from advances in shopper marketing, where brands are using digital technology to enhance their effectiveness in the ‘last three feet’ – the final few moments in which a customer makes a decision about which brand to purchase. From touch screens to useful apps, engaging digital content is vital to securing success in a bricks and mortar environment. Similarly, there are some fantastic examples of how auto brands are using a more integrated approach to cut through and engage with drivers. Take Toyota. Back in 2012, in the wake of damaging headlines about car recalls and post-tsunami supply chain problems, it was struggling to create excitement around the launch of its latest Camry model. The car is a popular one, with
Only by a smart blend of interactive communications can companies successfully deliver awareness and engagement.
6.8 million owners in the US. Toyota decided that the best way to change the tone of the debate was to harness the positivity of those Camry owners towards their vehicles. The Japanese manufacturer created a social network exclusively for Camry drivers, allowing them to share their very own ‘Camry stories’ and play online games. As well as reinforcing the fondness many drivers had for their cars, that enthusiasm was amplified through an interactive Super Bowl TV spot. The campaign generated some pretty exciting numbers for Toyota. It delivered over 460 million unpaid media impressions, prompted 80,000 ‘Camry stories’ to be submitted, provided an 800% spike in “real-world Camry interest”, and led to a 19% increase in sales leads.
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# Meanwhile, back in the UK, Land Rover spotted an opportunity to use consumers’ willingness to share on social media as a means of crystallising its intrinsic product strengths.
Land Rover has long focused its marketing around the all-weather and all-terrain capabilities of its vehicles. However, a couple of years ago it found a way of amplifying this fondness of the grim British winter, as well as simultaneously re-discovering the “charm and character” of its brand.
Targeting those consumers who enjoy maintaining an active lifestyle despite the cold weather, and opt against ‘hibernating’ through the winter, Land Rover launched a campaign based around the hashtag ‘#Hibernot’. Drivers were encouraged to share content displaying their resolute ‘hibernot’ attitude, with the resulting interactions shaping subsequent above-the-line marketing investment.
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After only a fortnight, nearly five million people had been reached on Facebook and Instagram, while the content was fed into a digital hub where drivers could seek out tips and ideas for winter activities.
Our final example is one of the most impressive case studies to date in its use of modern, digital communications: Nissan and Sony PlayStation’s ‘GT Academy’ partnership. The competition, launched to mark the release of PlayStation’s latest Gran Turismo game in 2008, invited video games fans to live the dream and become professional racing drivers. Gamers were called on to participate in trials across international markets, with the strongest applicants put through to a final. Two winners
were rewarded with a place on Nissan’s Driver Development Programme. GT Academy is a brilliant example of using the multitude of digital and social communications channels to fuel a single idea. It is, at heart, a truly social concept, with entrants using their social media presence to drive awareness. And the competition provided high-quality video content, which has even been sold to traditional broadcasters. Now entering its seventh year, more than five million gamers have entered GT Academy, and the concept boasts an enduring popularity – over 280,000 Facebook users continue to follow the campaign, for example.
WHAT LINKS THESE THREE VERY DIFFERENT CAMPAIGNS IS AN APPRECIATION OF HOW DIGITAL COMMUNICATIONS CAN BRING LIFE TO A FUNDAMENTAL BRAND TRUTH. What links these three very different campaigns is an appreciation of how digital communications can bring life to a fundamental brand truth – be it the connection between Toyota Camry and ordinary American drivers, the role of Land Rover in keeping Britons moving during winter, or the way in which Nissan is bringing racing to everyday motorists. They show how the interactivity and depth of modern marketing channels can be combined to create campaigns that drive more interest, brand consideration and engagement. Marketing is changing; those brands able to keep up stand to benefit enormously. #
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WOULD THE ABILITY TO HAVE ONLINE PURCHASES DELIVERED SECURELY TO YOUR CAR MAKE YOUR LIFE MORE CONVENIENT?
Car brands and delivery services alike (and often together) have long been toying with the idea of vehicle delivery – Audi’s trial partnership with DHL in Munich, for instance. But these trials rarely develop beyond the beta phase, meaning they’ve flown under the radar of mass awareness so far. With that in mind, we wanted to gauge the public desire for having items delivered directly to the boots of their cars. Traditionally, delivery services were the wrath of many an expectant customer. The typical experience involved a lot of lounging around at home while you waited for someone to turn up at some undefined point in a 12-hour window. But Adam Morgan’s ‘Unreasonable Consumer’ will no longer accept that sort of inconvenience. In response, services have become more customercentric, offering convenient, flexible and near-instant delivery options.
Indeed, over the last few years “Next day delivery” has developed from a hollow promise to a reliable necessity. In fact, Amazon is going one step further by patenting ‘Anticipatory Shipping’ – a system of delivering products to customers before they’ve even ordered them – while their Lockers service allows Prime members to deliver to dedicated lockers in public spaces. Yet these services are still reliant on a fixed location that a customer must visit.
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Would the ability to have online purchases delivered securely to your car make your life more convenient? YES
NO
I DON’T HAVE A CAR 36.78%
20.28%
42.94% July 2015 / Toluna QuickSurvey, 500 UK adults.
What about a delivery service that came to you, no matter where you were? It’s a popular idea in theory, with 37% of respondents saying it would make their lives more convenient (or 43% of total car owners) [chart left]. As with our previous survey (page 26), the age breakdown of these results yields an interesting insight. The 18-34 generation are substantially more willing to embrace a car delivery service, with 67% of car owners interested in the idea [chart right]. To understand why, we have to return to the Unreasonable Consumer – a topic of which is explored in greater detail in the next article (page 44). Older generations were brought up accepting trade-offs for the services they used regularly. To use Morgan’s example, “you can have a better phone signal and pay a bit more, or a poorer phone signal and it’ll be cheaper”. But services like Uber have opened our eyes to another way. A way that provides first-class services for minimal cost and effort on the consumer’s part. So it’s no surprise that younger generations no longer accept the trade-off – “they want a good phone signal with a cheap phone; they want fast food that’s ethically produced”. They want a delivery service that delivers directly to their car, wherever they are, securely and near-instantaneously. #
18-34
35-54
55+
51.83% 38.92% 18.18%
YES
25.00% 40.54% 64.94%
NO
23.17% 20.54% 16.88%
NO CAR
OLVING TH ILLENNIAL YSTERY:
A five-step guide to reaching young drivers
From Steve McQueen’s Ford Mustang in classic 1968 movie Bullitt, to the Ferrari 250 GT SWB California Spyder in 1986 comedy Ferris Bueller’s Day Off, the motor car has played a prominent role in the coming-of-age of successive generations. That is, until those troublesome Millennials turned up.
Fears have been growing that consumers born in the 1980s and 1990s lack the connection to the motor industry which characterised their parents and grandparents. The theory goes that a deadly cocktail of recessionary economics and improvements to urban public transport had nudged youngsters into embracing a future without car ownership. And the numbers can look worrying: in the UK, the number of young people taking driving tests fell by almost a fifth between 2007 and 2012. Only 31% of 17- to 20-year-olds hold a full driving license, compared to 43% in 1995. So how to best approach this Unreasonable Consumer, to borrow a phrase coined by Adam Morgan in his book A Beautiful Restraint? We believe there are five principles brands should focus on.
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The first is that Millennials demand communications as an experience, and not just a message. This group has effectively been trained by smartphones, apps and online services to assume everything is easy and well-delivered. They want experiences as much as products and they expect services and transactions to be easy.
2 3
Secondly, transparency and ease of access to information is vital. As discussed in our feature on changing approaches to automotive retail, brands such as Fiat and Audi are working hard to help consumers select their ideal vehicle using interactive digital experiences, helping to deliver the dealership experience without asking buyers to visit a showroom.
Second access t discuss approac such as hard to ideal ve experie dealersh buyers
When it comes to our third principle – the importance of personalisation – car companies should learn from the way young people buy their most prized possession: their smartphone.
When i the imp compan young p possess
For these consumers, a smartphone is not just a telephone, but an entire lifestyle placed into a pocket or handbag. Similarly, a car should no longer be viewed as simply a vehicle to transport the driver from A to B. Instead, it should fit into the immersive, entertaining, social experience these consumers demand from other forms of technology.
For thes is not ju lifestyle Similar viewed the driv fit into social e demand
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This brings us to the fourth principle, namely that car companies must provide a connection to Millennials’ lives through apps and digital technology. As our feature on connected cars outlined (page 22), manufacturers must open the vehicle as a platform to a wider network of partners, and help those partners deliver a consistently great user experience. Analysts at GfK report that, across Germany, the UK and the US, 46% of drivers aged under 34 find the idea of a fully integrated in-car entertainment system ‘very’ or ‘extremely’ appealing. This is more than double the percentage of drivers aged 45 and over. Those in the younger age bracket are also nearly twice as likely to prioritise in-car technology when considering a car purchase.
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The final principle is the need to enhance and digitise services levels. A 2015 report by market research company J.D. Power and Associates claims that younger car buyers are put off by the prospect of bartering with dealers – more than half would rather complete the purchase without needing to enter negotiations. Convenience is vital, reflected in the finding that 44% would be happy to pay dealers to pick up their car for repairs, rather than stepping foot in a garage. The good news for motor brands is that young people are not intellectually or culturally opposed to the idea of car
ownership. As the global economy has slowly staggered clear of the financial crisis of 2008, and these consumers have seen personal incomes rise, they have shown themselves every bit as willing to buy cars as previous generations. Millennials now account for 27% of all new car sales in the US, more than their Generation X predecessors and second only to Steve McQueen’s Baby Boomers. And, despite a supposition that younger consumers are wholeheartedly embracing the sharing
YOUNG PEOPLE DO WANT TO BUY CARS, BUT THEY ARE DEMANDING NEW WAYS OF DOING SO AND A FAILURE TO COMPLY LEADS TO BRANDS FALLING FROM 47 CONSIDERATION.
economy (a topic explored in our feature on the future of car ownership on page 10), a 2015 investigation by Millennial Branding reports that 71% of young adults would rather buy a car than lease one. Millennials represent the most extreme example of all the trends we have examined in this report. Young people do want to buy cars, but they are demanding new ways of doing so, and a failure to comply leads to brands falling from consideration. The generational split is permanent, and car firms must now invest in mastering this new world, testing and learning the best approach for their brands. The cost of failure in the eyes of a generation with high demands would be terminal. #
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