We want easy access to a vehicle that we can just spontaneously jump in and use to go wherever and whenever we want. However in today’s world, the most common way to achieve this is buying a car or attaining one through a long-term lease. Isn't it about time the automotive industry changed to commoditise their product offering and turn it into a service?
Disruptors are entering the UK market to offer this type of a service, surely the Original Equipment Manufacturers (OEMs) should take the lead and drive this change and avoid being on the back foot?
Commodity is seen as a negative thing - telecommunication companies have been fighting it for years. However, we live in an increasingly commoditised world.
Today it's all about being customer-centric and about the experience of engaging with the service. Therefore, in the case of mobility, it is no longer only about the car and the 'driving experience'… it’s about Service Experience.
Today's vehicle manufacturers are selling their brand on the 'lifestyle experience', choosing to focus on sustainability, safety or performance. Yet, looking from the consumer's point of view, they simply want mobility, lack of restrictions and an excellent 'service experience.'
Think of the car adverts you have seen lately – they might show a dad driving his daughter to school or a group of friends heading out to the beach. Can you name the brand or car in question? I bet you can't! Marketing based on a 'lifestyle experience' is a good strategy, however the ‘lifestyle’ should be about convenience and reliability and not about the car.
The brands that are actually getting people talking are great service providers – such as Uber and Airbnb.
Clearly, it's no longer about owning an asset, a 'thing', whatever social function and stature it promises to deliver - what is important today is the function, availability, and reliability of the service, which is increasingly becoming a commodity.
Is our personal mobility the next commodity service?
Consider this - if you hire a car on holiday, you'll want to know about price, reliability and function, the number of seats, the space it offers, and maybe child car seats. You do not want a test drive or a particular colour. These factors can all exist because it is a short-term commitment, typically for a couple of weeks.
Getting used to this kind of service offering has meant consumers are increasingly looking for a decreased commitment in vehicle mobility. They don't want a multi-year obligation to buy, nor do they want a three-year lease with a balloon payment. They are looking for shorter, more flexible leasing and then, eventually, a service that aligns with their expectations – a commoditised customer-centric service model.
A mobility service that can change and adapt between the seasons, between your daily routine and beyond.
Sustainability and social responsibility are also crucial factors, and it's important they do not get diluted or missed within a service.
The recent COVID-19 crisis has acted as a catalyst for accelerating the change in people's priorities - however, we still do not know the long-term shifts in behaviour that this era will deliver. That said, I am sure it will mean a re-evaluation of our beliefs about asset ownership. It will surely serve to accelerate the car industry towards having to offer a more commodity-based service model, but by how much, only time will tell.
Product success depends on customer experience, surely now the product is the service and not the car? Back in the early days of automotive, the disruptor and innovator was Ford, not just because he commoditised the car and gave little choice of colour or specification, but because he recognised that customer experience went beyond this, he created local motoring clubs and organised driving activities, he built a product around the customer journey.
The customer journey today and tomorrow is about convenience and reliability
For Today's car manufacturers, this presents a challenge as much as an opportunity. It will require a complete change of mind-set and a rethink of their business organisation and culture if they are to realign with what their consumers want.
For the industry to overcome some of these challenges, it will need to partner with organisations like NTT DATA. We have the experience of reshaping businesses. Together; we can help move from an asset ownership business model to the commoditised service model that consumers are seeking.