Automotive Research Forum 2013

Erika Harriford-McLaren

Venue choice is always an interesting part of putting together a conference or forum.  Fortunately, for the ESOMAR Automotive Research Forum, through our forum partnership with Volkswagen, we have been able to welcome over 150 people to the amazing Autostadt – the latest VW Innovation Park.

After a 5-year hiatus, ESOMAR has ventured back into the Automotive world and as ESOMAR President Dan Foreman noted – the timing could not be better – as industries in Europe, Asia and the Americas  – are showing positive results for the first time in ages and even a possible rebound for the depressed global automotive industry.

Gilbert Heise, Head of VW Group Market and Trend Research and Programme Chair for the Automotive Research Forum, was a key factor in getting this forum launched.  As a client, he felt that now is the time for research to take on the challenges this industry is facing and gave some suggestions on areas to focus on:

BRICS – the need to adapt to the needs of the BRICs and to gain relevant research on these markets to drive proper product development and promotion. There really is no need for centralised MR teams at HQ and counterparts at agencies.  We need local experts for local insights and to bring it together on a global level for comparison. This is a module strategy for creating new cars for commonality – and this needs to come from research agencies.

Fragmentation of the market – with more products coming in, new engine types, energy vehicles and new brands, the market structure is becoming more and more complex.  So what does this mean? We need to work more with forecasting and system dynamics to combine data and the latest analytical technologies and find out how different information is relating – not common for all areas of MR, but shouldn’t it be done?

New Questions from new sources need new answers  -from social media,  new technologies  and mobile integration – these new areas must be not only considered but explored and integrated into the business of the industry. Gaining insights and moving from the average customer to micro-targets is vital and will require tailor-made promotions and closer relations to media agencies and the media for connecting all the systems to reach these consumers.

The all-frequent notion of speed – not only because automotive companies sell fast cars – but because automotive  CEOS need to make even more speedy decisions – to keep the industry moving ahead –  requiring straight answers and straightforward communications.

Finally, the industry needs to be open to new and different ways of doing research – i.e neuromarketing and social media; moving from information to infotainment and importantly, making information available in dashboards which allows for figures to be used and or for those less inclined to hard data, for knowledge gained through entertainment.

GLOBAL ROAD

The Road to Riches Fuelled by Brand Power
Nick Bull, Millward Brown Automotive, UK
Peter Walshe, BrandZ Millward Brown, UK

Peter Walshe of BrandZ Millward Brown always comes with entertainment.  Alongside Nick Bull from Millward Brown Automotive, the two launched a new study and a somewhat comical reveal of the latest list of the Top 10 most valuable global car brands.

Millward Brown measures Brand Power from a brand being seen as more meaningful, differentiated and salient (famous). Meaningful brands are seen to have a real purpose – functional but with strong emotional bonds, such as Land Rover – a real iconic brand with rich heritage and good off and on-road value. Meanwhile, Saliency refers to memories and associations.  British Airways is the most well known airline in the UK, but when looking at salience, Easy jet wins because they have built a strong association with price and great value – key needs for today’s consumer!

Lastly, different stands for being unique in a competitive sense and having momentum in the business and a sense of leading the way.  Ask 10 people what Volvo stands for and most would say safety  – and this is because Volvo understands themselves, their customers and their competitive environment.  Apple also does well in all categories, as their basis for success is a consistent approach to new innovation while projecting a unique approach.  However, doubts seem high on whether this  will translate into success for the Apple concept car…

According the Walshe and Bull, it is a sea of sameness hurting the industry and not the economy. Middle brands are struggling with being distinct enough to keep car buyers interested and thus are being squeezed very hard – not just this industry, both other industries as well –  and they project that this will  strengthen and continue in the future.

So, what is the risk on not getting it right…the risk of disappearing altogether.  Brands must gain more credibility to move into premium markets or be willing to compete more aggressively with value brands.  The question they left us with is how is this to be done…

As a final sign off, Walshe – former actor on Dr. Who – dressed as the Bard – Shakespeare – to announce the exclusive latest Top 10 Listing of Auto Brands from Millward Brown.. infotainment at its best… And the winners are:

1. Toyota
2. BMW
3. Mercedes Benz
4. Honda
5. Nissan
6. Volkswagen
7. Ford
8. Audi
9. Hyundai
10. Lexis

Car Industry 2015
No Connectivity, No Customers – Fiction or Fact
Markus Muller-Martini, mm customer strategy, Germany
Matthias Kempf, Berylls Strategy Advisors, Germany

Since 2007/08, major Original Equipment Manufacturers (OEMS) have revitalised their programmes due to smart phones and cheaper means of communication.  Without a doubt there was and is increasing pressure for OEMs to deliver something.  Markus Muller-Martini of mm customer strategy and Mathias Kempf of Berylls Strategy Advisors in Germany, explored this in their presentation  – No connectivity, no customers – Fiction or Fact.

In their research they found that 40% of new car buyers do not know any OEM connectivity services – and when they do, it is the premuim car brands that have the highest awareness.  Often connectivity is associated with premium but the actual offer may be different. For example, Porsche was perceived as offering high connectivity in their autos but in reality they didn’t really offer much.  Perception is key here.

So, do customers value offers currently presented by the OEMs? When comparing connectivity with other options like climate control, aluminum rims, and alarms – it seems not so much at first glance – when they just look at options given. However, when asking them if they would pay for connectivity – 44% said they would be willing to pay for it – meaning that they value it more than what initial findings showed. Surprisingly, Infotainment services are least valued by customers – it’s actually safety, navigation and comfort that outweigh the need for infotainment.

How many services do users on average choose when given choice? Most only demand a handful  of services in fact. When offered one service, 99% have an interest in having it – but when the number of services is increased the interest is dramatically decreased and willingness to pay is gets closer to zero.. So choose your services you offer wisely.  Do the research and find out what the targeted choices are…

TRAFFIC LIGHT

AUTO BILD Market Barometer Connectivity
The connected automobile is gaining momentum
Nicolas Loose, Axel Springer, Germany
Thomas Schindlbeck, Happy Thinking People, Germany

Using a deep dive into online community – Nicolas Loose of Axel Springer, and Thomas Schindlbeck of Happy Thinking People – actually took a step back and asked participants if they had ever even heard of the term “connectivity” in connection with cars…  In fact, 69% said they hadn’t even heard of the term in general, which to these researchers signalled an awareness problem. In their study they asked consumers to point to the most and least interesting features offered and found that more familiar people are with a feature the more attractive it becomes.

Of those they studied, 71% of participants planning to buy a new car said they planned on purchasing a connectivity package. While this has the potential to spark enthusiasm, manufacturers really need to focus on extensive communications campaigns so people know what these options are in the first place!

They worked with two groups of males – Established Middle Agers (EMA) and Young Urbans (YU).  As would be somewhat expected, the EMA group were well off, owned premium to luxury cars as well as smartphones and their lifestyle was equated with “always more”.  Conversely, the YU Group were aged 20-30, urban and higher-level education, with only some owning cars, and all intensive smartphone and tablet user. Their lifestyle is equated with always on…

For EMAs – care were seen as fun toys, fortresses and symbols of success as well as a protective shield for oneself and family. For them, connectivity needs to symbolise individual progress and is an expression of the next stage of their technological advancement. It enables performance and efficiency and for them shows that they are still up to it, letting them as the driver to stay at the center of his connected world.

For the YUs- cars are becoming a consumable. YUs are often rationally distant to a car versus EMAs who are still full of enthusiasm.  However, when the topic of smartphones in this area was introduced – the level of enthusiasm grew tremendously. For these men, the car is did not represent the only tool to use to experience freedom – they were connected enough in many other ways in their lives. They need more…

Connectivity has the potential to move cars forward into the digital swipe culture – appealing to the YUs. It enables cars to become part of a 360-degree, always on lifestyle and if they want to survive, auto makers will have to adapt to it. By doing this the EMAs and YUs may find a way to meet in the middle. User friendly with aesthetic value may bring a win – win!

Where the Rubber Meets the Road
Understanding what drives the automotive retail industry
Chris Travell, Martiz Research, Germany

Using a case study of client Hyundai, Chris Travell of Maritz Research demonstrated how by focusing on a make or break analysis – researchers can create a holistic approach to improving the customer experience and expectations.

Hyundai Canada CEO Steve Kelleher believes that improving customer satisfaction is a differentiator and will make Hyundai stand out. He aptly noted in a video produced for the presentation that “the next battlefield for the fight for sales is in the showroom.” In a few words – customer experiences will drive business in the future.

So with this in mind, Maritz explored how research  can help to measure this more effectively than ever before… and their solution was with a “make or break” customer satisfaction study – i.e asking customers to evaluate sales experiences, negotiating a deal, etc… and rating their positive and negative experiences.

Maritz found that this brought better results than comparing methodology numbers, as it allows for a more focused approach on what to improve and to highlight risk or downsides for not doing something well. This was not really illustrated for research before.  Doing well may not give a huge lift, but the penalty for not doing something could be worse – in some cases 7 times greater on impact than if something was done right! Considering satisfaction and dissatisfaction separately really helps.

So where does the rubber meet the road with Hyundai. They now focus on the “make” moments to differentiate – because positive WOM happens and the more they can support that (think Super Promoters) the better.  Additionally, they can now on a dealer level target and eliminate the “break” moments making for a better sales experience all-around.

CHINA BOULEVARD
Session Chair Remy Pothet of TNS France noted that with less than 20 years of history, China has become the dominant player. More than 1 million cars sold per month – from more than 100 brands and 5 million models! The potential for the auto industry is huge here and what we will see in the next 20 years will be a true game changer.

China is the #1 priority for every carmaker in the world and he believes it will be the driving force of the future of the industry – hence the dedicated session in the ESOMAR Automotive Forum.

Next Steps Towards Central China
Sifting consumer requests
Lifeng Liu, Ipsos, China

Lifeng Lui, CEO of Ipsos China, first speaker of the session and one of the main drivers behind research in this industry and market, raised key questions about what Chinese consumers in both the West and East of China expect.

Looking at Central China – he explored the new second wave of demand in central China and especially from the strong demand of the lower tier population for car ownership. Do they follow the patterns of top tier groups or have different requirements? China’s passenger vehicle market is expected to grow hugely in the next decade, but when looking at cities the patterns differ. Bigger cities have more mature markets and expectation is that growth rates will decline.  However Tier 2-5 cities will likely experience significant growth, with Tier 4-5 having 80% first time buyers.

With188 million population (same size as Germany, France and Spain), the potential for Central China is huge.  In-depth interviews in three chosen cities brought out three key areas for the industry to focus on.

1. In these tiers there is an upbeat and positive outlook towards personal progression with traditional values and modern lifestyles coexisting in a world full of career and business opportunities. Even the new President of China’s most frequently used words are “The Chinese Dream” – meaning better housing, education and of course a car!
2. There is an expectation of good quality, so don’t offer outdated designs. Give basic functional quality, as design is the expression of a modern life for them. The notion of newness is also important – used cars are not seen as transparent and give rise to concerns on quality.
3. There is a rather basic reading of brand value – it is not negotiable as it represents functional quality and status.  Reliability and trustworthiness are key and lend to views of success and respect.  If you offer it, make sure it is a “DaQi” brand  – i.e offering  grandness and decency –  with an interplay of brand and design.

Overall, Tier 1 wants quality, brand and design but because income is lower, affordability is important. Cheaper Chinese cars cannot respond to expectations while international model ranges are too expensive.  So there is a space for something different – a window for entry-level concepts… lower price but good quality. Quality is key but appealing quality is necessary.

Unraveling China’s Complex Path to Purchase
Andrew Turton, TNS, UK
Gary Player, General Motors, China

Andrew Turton, TNS, UK and Gary Player, General Motors, China reminded us that since  2009, China has been the largest manufacturer and with this comes the need to understand the peculiarities of that market.  In contrast to earlier presentations, in China young urbans love cars and can’t get enough of them and top brands include Buick, not Volkswagen, meaning that the Chinese path to purchase is turned on its head compared to the West.

According to Turton and Player, China has in fact 121 brands now with models growing to 460 over the last years.  You can expect an additional 155 more models to launch in the next 5 years!  This is huge and creating a legacy intellectual footprint – we can’t afford to spend resources in markets that are not growing… As connectivity is key, we need to be on Chinese social media and not Twitter and Facebook to reach them. Focus, focus, focus…

Basically, traditional look back studies don’t work in China.  They need to be engaged in the now. So using digital and journal records as well as some focus groups (although limited to avoid bias), GM and TNS intercepted Chinese car buyers at the point that they made a  decision. What did they learn?

In short, the funnel is dead and decision trees rule…Consumers keep many models in play and add more right to the end of the process.  There is in fact a complex number of paths to purchase. For example – most frequently used touchpoints were family and friends – many of whom do not have immense knowledge about the vehicle, but are likely to be invested either through money,  or through usage.  This involves integrating traditional with the modern out of practicality and respect.  Something that shouldn’t be overlooked.

Additionally, brand touchpoints have greatest impact early in the process. As the decision point nears, other voices play a more decisive role – i.e. in China dealers are trusted as true and honest advisors.  Thus brands must find ways to influence and be key in present moments. Chinese consumers take a long time to choose and failure to follow up can cause brand decisions to change dramatically. Influence comes not only from family and friends, but also independent online reviewers.

Overall the longitudinal tracking allowed for exploration of interconnected touchpoint relationships.  While friends and family are have high impact – dealers are spokes connecting multiple channels – dealer websites, promotional offers, radio and billboard as well as car brand websites. Connect all of these to a dealer and the decision touchpoints for a brand will grow. In the end online reviews and family are the blessing point, but the decision making ones can still be in the brands hands if they connect the touchpoints right. Hat Tip – social media is really only used for promotions… so take note and see how brands can better use this as well…

Big Data, Better Decisions
How does business intelligence drive change in Chinese auto market
Tiger Lee Weihan, Sinotrust, China

Exploring how Big Data can be integrated with Business Intelligence, Tiger Lee Weihan, Sinotrust, China implored the industry to integrate information, marketing, business, systems and strategy to ensure maximisation of the full potential of big data for automakers and sellers.

Its important to use data warehouses and dashboards for data analysis – so that information sent out to business areas is readily available, found and digestible.

Six key areas of importance in using big data for business intelligence are sales and marketing, aftermarket management, dealer finance management, market share management, CSI/SSI/auditing and value chain management.  This covers the breadth of business and reaches the proper business intelligence touchpoints for full value and should be used as an internal auditing tool and not an IT system.  It should be truly integrated into the business.  Interestingly, Lee noted that in China traditional MR is used in a more business way versus marketing, when underscores the important role of MR in business decision making. .

Long-term clients need a 360 degree angle and historical trends, so big data can allow for that as well as for online analysis and communication coordination.  You can build strong models from the beginning to end of the customer life cycle model with this, which is key in a fast changing Chinese auto industry.  Lastly, some helpful tips for big data and better decisions in China… Remember that OEMS care more for sales than after sales; data integration and cleaning is difficult in China, so be prepared to have time for this; Churn models should be jointly used with value models and you must remember to predefine your churn loss i.e. churn to dealer or OEM; models should be deployed into business intelligence systems and finally, of course get feedback and make sure to close the loop.

NEXT STOP – THE AUTO-LAB

Car Clinics 3.0
Designing better cars by peering into consumers brains
Ronny Pauwel,Toyota Motor Europe, Belguim
Wim Hamaekers, Rogil, Belguim

The first session in the post-lunch fast track thread was Ronny Pauwels of Toyota Motor Europe and Wim Hamaekers of Rogil talking about a research project that aimed to to accurately measure the emotional drivers of car design that engage consumers. Ronny explained that people often judge a vehicle on the execution rather than fundamentals. They needed the research to identify and explain the specific elements in car design that customers emotional engage with in an effort to help them design better cars inside and out.

So are people rational about their emotions towards products? As an example Wim presented a video where consumers provided their opinions on the new iPhone 5 when they were actually shown an iPhone 4. It showed that people are experts at rationalising emotions wrongly based on expectations.

Rogil used a mix of conventional methods such as qualitative interviews and behavioural methods such as EEG measurements, eye-tracking and skin response; measuring short term arousal. This allowed them to discover what is happening at an unconscious level.

In the first stage of research they showed respondents virtual films of car models in a CGI lab test. Interior and exterior aspects of cars were shown and they recorded responses to relevance, activation and attention inside and outside of the car. Using these methods they could give an overall evaluation of the appeal of the car and identify the drivers and weaknesses in appeal. They could also measure appeal on first exposure and once the consumer had a further exploration of the car.

In the second stage they moved consumer to the real thing. Carrying out product experience testings on car models. Respondents would sit in the car with eye-tracking apparatus, and the test was followed by a qualitative interview. They found the interview in isolation gave no clear guidance of choice of interior materials But the neuro-research results on ornaments and interior materials gave clear-cut positive engagement indication.

Wim finished by stating that organisations need to be aware your customers make choices unconsciously. In order to best understand these choices you need to mix conventional tools with neuroscience tools.

Beyond the Silo
Joining dots to maximise brand insights for the BMW Group
Harald Schuster, GfK, Germany
Sabine Hatz, BMW Group, Germany

Harald and Sabine were here to talk about the huge amount of data that BMW collects and how to apply it in a holistic approach to the purchase funnel.

BMW collects information form brand monitors, communication monitors (advertising awareness), carl clinics, early buyer studies, pricing studies and data from service and product satisfaction surveys. And all these studies are done on country level, this often means marketing managers are overwhelmed by the huge amount of data available to them.

They needed a way to integrate all of these relevant research studies into a system that could easily identify key drivers in the purchase funnel. By doing this different levers could be analysed at different funnel stages and compared to competitor analysis. BMW found that they could deep dive into aspects like communication and see weaknesses, such as a lack of focus on design in their comms strategy and then actively make changes to prevent these weaknesses.

So how did they join the information dots? Harald told us that the lack of information is not the problem. The issue is the way the data is stored in separate silos. Using a framework integration allowed them to align different data sets for analysis, that could be standardised, allowing for consistent outputs making it easier for marketing managers in different countries. Another way to align the data was with evidence based integration, this allowed flexibility, and the team could start with a concrete business question and then define which data is best suited to answer it.

But how do you transform MR into insights. The above are just tools, it’s important to reference back to what you already know about the brand and the knowledge and experience that already exists in the agency. More complexity behind the scenes gives more straight forward recommendations. It needs to be worked through a network structure.

Harald finished with a couple of key takeaways.

• Insights integration is more than just a technical issue, for it to be successful in the long run you need to change the way you work, but it will all be worth it for insights you can deliver.
• Integration enhances research effectiveness, efficiency for client and for the agency. It also increases market expertise and strengthen the customer relationship.

The King is dead … long live the King
The power of research is redesigning an automotive icon: The Range Rover
Anne Bolingbroke, MM-Eye Ltd, UK
Steve Hill, Land Rover UK

Anne and Steve were here to talk about their work with Land Rover, and in particular using research in developing the flagship SUV the Range Rover which first launched back in 1972. The societal background is now radically different and there is far more to consider in terms of brand values and health and safety. Consumers are far more sophisticated and new technologies are the norm.

In the past the vehicle was created from scratch with a singular genius and a small group of engineers. Now when doing early concept work and car clinics you need to bring in a whole host of designers and engineers into the process. You need to make sure you’re getting under the skin of your consumer to ensure you can develop a great product for the future. How can research both reassure and inspire the design team to confidently do their job?

During the research process they found stakeholder immersion critical. They approached customers as consultants in on-brand settings. Taking their designers and engineers around the world to meet and greet their customers. Providing insights into how the vehicles are used from New York to Dubai and the specific requirements from each market. They held high-end dinners instead of focus groups and combined with immersive activities, such driving in towns and deserts. They wanted to the designers and engineers to go on a global journey to really understand the use and appeal of the vehicle across the world, rather than in just a small area in the UK.

THE FUTURE HIGHWAY

Psychological Automotive Lifestyles
The analysis of automotive lifestyles to support targeting
Dirk Zeims, concept m, Germany
Gabriele Lehmann, Johnson Controls Europe, Germany

Gabriele started by explaining that the business to business nature of a supplier to an OEM means there can sometimes be a wall between the business and the needs of the consumer. It’s important for the supplier to understand both the OEM strategy and what drives the consumer. Today Gabriele and Dirk were here to talk about the importance of lifestyles for development of innovative and differentiating products.

Dirk started by asking what attracts target groups to specific models and features of vehicles. With 160 new models released in 2013, consumers have a huge choice. concept m use two complementary approaches for segmentation research. A sociological approach which looks at values in aesthetic styles and a psychological auto lifestyle approach which looks at psychological motivations for purchases.

Dirk went on to present an example of ethnographic interviews that had been carried out that for the lifestyle approach. They carried out intensive long interviews with the respondents and took photos of their homes, a lot of conclusions can be made based on apartments. They investigated the emotional bond with the car and went on a journey into the lifestyles of consumers and what their car meant to them and the relationship between car features and lifestyle choices.

This allowed concept m to segment consumers into accurate and precise groups, such as everyday routiners, social climbers, business drivers, leisure escapists. All require different ideals and requirements and their connection to and use of the car varies.

A precise consideration of cultural influences is an essential part of the automotive lifestyle research. You need to understand how cultural values shape development of the automotive culture, particularly in developing countries.