Lighting up the road ahead

If auto manufacturers are to navigate a fast-changing future, they need consumer segmentation that tells them what’s coming next.

You wouldn’t drive a car at night without headlights, because you need to see what’s ahead of you in order to avoid disaster. And yet, when it comes to anticipating customer needs, too few manufacturers are being given any meaningful view of where they need to steer next.

Consumer segmentation studies are hugely important deliverable for auto manufacturers. They are the basis for how they plan to refurbish their model portfolio over the next 1-3 years, and how they will re-engineer and reinvent it 10 years down the line. And yet most segmentation studies start to lose their value almost as soon as the last slide of the key findings is off screen. They describe the present; they don’t anticipate the future.

The future: the missing ingredient

Segmentation studies should analyse the intersection of auto buyers’ core values with their beliefs and needs. Auto research agencies have become expert at describing this intersection with scientific rigour. However, they have failed to apply the same rigour to analysing how the different elements in it will change over time. Values and beliefs may remain fairly constant, but needs are an inherently dynamic variable. An analysis of this dynamism is the missing ingredient in the vast majority of segmentation studies. We act as if the present circumstances will continue indefinitely, when the truth has rarely been more different.

Over the next 10 years the need-states that drive buyers’ choice of new vehicles will undergo extremely profound changes: rapid urbanisation producing generations of city dwellers asking themselves whether they need to own a car at all; ageing yet still active generations with very specific needs; younger demographics for whom cars are predominantly lifestyle hubs, and for whom the technology and connectivity within a vehicle is at least as important as the technology making it move.

Driving with the headlights off

At present, auto brands are seeking to navigate through this complexity with no clear view of the road ahead. If they’re using traditional segmentation studies, then by the time a changing consumer need becomes apparent, they have a lot less time than they would like to do something about it. The fastest product development cycle for new cars is currently four years, and yet most segmentation studies simply aren’t designed to project accurately this far ahead. Furthermore, with many manufacturers narrowing down the range of common technological platforms which drive the development of their vehicle models, decisions need to be made now that will dictate the shape of auto brand portfolios a decade or more into the future. And yet too few manufacturers have a meaningful way of analysing what that future will look like. Choose the wrong platforms and they could face some very difficult (and very expensive) readjustments later.

An open-source approach to research

How can we give auto brands the capability of anticipating the big changes and steering the most profitable course for the future? We can start by getting serious about future-proofing segmentation, and while we’re at it we can help to accelerate manufacturers’ speed to market as well.

In both areas, the key to doing so is to acknowledge the specialist expertise required. Futurology, the study of changing trends with a view to making data-driven projections about the future, is a science of its own with distinct skills. Working with specialists in this area to add a meaningful, data-driven view of the future into segmentation studies significantly increases the value that those studies offer for planning future strategy. As the needs of auto consumers’ tomorrow become increasingly different from their needs today, manufacturers are likely to see this as an essential part of the research package.

At the same time as increasing the ability to project consumer needs into the future, we can keep working to accelerate the speed with which manufacturers respond to them. The key contribution that research can make here is in speeding up the innovation and product development process, and once again integrating the right specialist skills is crucial. Virtual car clinics, which use technology partnerships to cut concept testing periods from months to weeks, show what’s possible in this area.

Finally, the development of connected car technology and big data analytics will provide manufacturers with new and more immediate sources of insight on driver experiences, which they can use to inform segmentation. However, they will need an open-minded approach to technology partnerships in order to leverage this data effectively.

When it comes to making auto research more forward-thinking and responsive, this open-source approach to integrating new techniques is crucial. The best way for researchers to help their clients become more nimble is to adopt more nimble and responsive approaches themselves.