says Guillaume Saint, Senior Director, TNS Automotive China
The Chinese market has been seen as the El Dorado of the automotive world. Following several years of sharp increases in new car sales that delighted manufacturers, the pace of growth has somewhat slowed. The prospect of double-digit growth in the coming years is no longer a given.
In recent years, the major challenges for auto manufacturers were to turn out enough cars to meet very strong demand and to expand dealer networks to ensure that no sales opportunity would be missed.
Intense competition
The situation is now changing, and whilst the country became the focus of so much attention - with every car manufacturer wanting to be in the China market - the competition quickly intensified: in 2011, more than 90 different car brands were offering more than 470 different models. This is by far the widest choice offered to potential car buyers, compared to every mature auto market.
As the Chinese market is facing a relative slowdown in new car sales and the toughest competition ever seen, it is apparent that car manufacturers can no longer rely on market dynamism to develop sustainable sales. Increasing one’s own slice of the cake becomes critical to sustainability. It means that every car brand has to offer something different and unique to attract buyers.
The question is: How to stand out when each model has to compete with 469 others?
It’s time to innovate, with a deeper understanding of the complex needs and desires of car buyers. All brands need to be managed so that they are internally consistent and reflective of consumer needs. Three major dimensions have to be considered when it comes to uniqueness: the functional needs, the identity needs and the emotive needs.
- Functionality relates to the size of the car, the number of seats, the engine power, fuel economy, price, the carriage capacity, and other physical attributes.
- Identity relates to the identification of peer groups, the income level expressed by a car and the lifestyle image that the car projects.
- Emotional needs relate to feelings, such as adventure, power and caring, and to personal aspirations, such as ambition and individuality.
Most of the time, offering a clear answer to functional needs is pretty clear-cut and achievable.
Some brands on the market already have established their image based on this multi-layered structure of needs.
However, the majority of automotive players have not yet fully developed their reputation and image as far as car buyers are concerned. These brands are consequently exposed to price pressures. They do not provide reasons to pay more.
Of course, foreign car brands that enjoy a long heritage built in their home countries and their expansion abroad have clear advantages there. However, recent launches of new car brands in mature markets, such as Dacia in Western Europe or Latin America, demonstrate that it is still possible to build a differentiating positioning within a short period and to attract a significant number of new car buyers.
Developing a unique position is a first step: making it clear to potential new car buyers is another challenge.
In that respect, the key success factors lie in the consistency of the ‘messages’ the brands convey to consumers. Beyond traditional media, car drivers are exposed to multiple touch points, including visits to a dealer showroom or a motor show, Internet forums and word-of-mouth. All contribute to shaping a car’s image in people’s minds. The consistency of messages pushed across touch points is crucial to ensuring that the message received is unique, loud and clear.
Dismissing these fundamental dimensions or being late in implementing winning strategies will expose car brands to the high risk of disappearing from the Chinese El Dorado.
That won’t be good news for new car buyers.
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