Automotive Product & Marketing Innovation For Millennials

Dude, where’s my car?Dude, where’s my car?The “complicated” relationship between the automotive industry and Millennials

Product and Marketing Innovation Deep Dive

About this reportThis report is the first follow-up to Different Spin’s Millennials

and automotive research study ‘Dude, where’s my car?’.

This report will not be about how to develop ads to engage

Millennials. we hope your advertising agency has that covered.

Instead it will explore how product planning, marketing and

communications professionals can work together NOW to

develop and monetise services as well as products that will

appeal to the next generation of car buyers.

We’ll explore the findings of our research in the context of the

wider market trend of the collaborative economy.

The overwhelming findings from our report show that

Millennials WILL buy cars, but just not as we know it.

Download the full research report at: different-spin.com

#DifferentSpin | Product and Marketing Innovation | 2

“If the trends seen in this report become reality, a business based purely

on production and volume sales will fail. Traditional OEMs must become

service-based businesses to thrive.

The Spotify and Netflix generation is as comfortable sharing and

subscribing to their driving options as they are to their entertainment.

Smart players will place equal emphasis on monetising services as they will

innovating their product range.

In almost every sector the 21st Century has seen the manufacturing

giants of the 20th overtaken by nimbler, more forward thinking

competitors. Will Toyota and Ford go the same way as Kodak and Nokia?

Or will they have the courage to balance an increasingly out-dated model

with something fit for the next 100 years?”

Kate Cooper, Chief Strategy Officer, Different Spin and Bloom Worldwide


Foreword

Last week a member of the Different

Spin team put down a deposit on a

vehicle that they had never driven, never

touched, never seen with their own eyes

– only in pictures online.

It’s not in production yet. They’ve never

talked to a representative from the

company that plans to manufacture it

and certainly haven’t visited a dealership.

And they made the decision to put down

a non-refundable deposit of $1000 via

the OEM’s website.

Why?

Because they were so compelled by the

product, the proposition and the way

they marketed it that they, alongside

47,000 other people have put their

money where their mouth is and taken

the plunge.

The company that inspired this crazy

commitment was Elio, an OEM that is

really shaking up both product and

service development, and nailing how to

market a vehicle that isn’t even in

production yet.

In this report we look at how interesting

new companies like Elio and much more

established OEMs like BMW are

innovating in the automotive space. I

hope it sparks some ideas and fires up a

desire to change the face of the industry.

Kate Cooper, Chief Strategy Officer,

Different Spin and Bloom Worldwide


Contents

Introduction Page 06

The collaborative economy Page 16

CoLab Innovation Framework Page 21

Elio case study Page 36


Section one

Introduction

A Different Spin

Methodology

Executive summary


A Different Spin

Different Spin is an automotive engagement and innovation lab founded by Bloom Worldwide.

We enable traditional players to innovate and new entrants to compete.

We are a heady but dynamic mix of commercial strategists, data geeks, futurologists,

technologists, designers, creatives and producers working across 5 countries.

We provide a different spin on automotive.

different-spin.com // bloomworldwide.com

RETAIL INNOVATION

ENGAGEMENT SERVICES

MARCOMS INNOVATION

PRODUCT & SERVICE

INNOVATION

STRATEGIC INNOVATION

EDUCATION & INSPIRATION

RESEARCH & INSIGHT


MethodologyDEFINITIONS

For the purpose of this research we focus on Millennials aged 19-34

years-old in the UK. Some charts in this report include different age

groupings, where the data is from external sources e.g. National

Travel Survey and we have been unable to obtain data in different

formats. All charts are clearly labelled and sourced.

RESEARCH METHODOLOGY

We used a combination of quantitative and qualitative research

approaches to create this report with a total sample size of 33,521.

1.  Audience profiling through GlobalWebIndex survey data from a

representative sample of UK internet users.

2.  Deep dive research panel of UK Millennials

3.  Reevoo Car Buyers Panel survey

4.  Analysis of publically available data on driving trends in the UK


URBAN / RURAL PARTICIPANTS

Within the Millennial segment, we included viewpoints from

both urban, suburban and rural participants. Each research

approach used a representative sample of Millennials across

these three categories, with emphasis placed on urban and

suburban over rural to reflect dwelling trends amongst UK

Millennials in real life.

As expected there were differences in current transport

habits, with more rural and suburban Millennials owning cars

and relying less heavily on public transport or services like

Uber and City Car Club.

However attitudes towards the future of mobility and

technology innovations were less defined between urban and

rural. The low availability of certain services in rural areas

now does not mean there isn’t demand for the future.

Further detail on methodology is provided in the full report.

Executive summary

INNOVATION IS KINGSo first to answer the BIG question. As the next

generation of car buyers, will Millennials actually

buy cars?

In short YES, but not as we know it.

The Spotify and Netflix generation is as

comfortable sharing and subscribing to their

driving options as they are to their entertainment.

Smart players will place equal emphasis on

monetising services as they will innovating their

product range.

And it’s this that is important for both traditional

OEMs and new entrants to understand. It’s these

nascent trends we’re seeing in the Millennial

generation that tell us where the automotive and

mobility sector is headed.

One thing is clear: innovation is king. If the trends

seen in this report become reality, a business based

purely on production and volume sales will fail.

Traditional OEMs must become service-based

businesses to thrive.

Our goal in openly publishing both this and

upcoming research projects is to accelerate

innovation and change in the automotive industry.


Executive summary

CAN’T DRIVE, WON’T DRIVEMany of the Millennials in our study that do hold a

full driving licence choose not to own a car and

rarely drive. There are a number of reasons for this

but primarily it is because they simply don’t need

to.

Millennials in the city are less dependent on driving

because there are more alternatives. They ask

people to give them lifts, they have taxi apps on

their phones and Google Maps in their pockets to

help get around on foot or public transport.

Learning to drive and owning a car is less of a rite

of passage for many Millennials.

There are other things fighting for their money and

time, and other priorities in their lives.

Committing to car ownership is a burden for many

Millennials, who favour financial freedom over

driving freedom. They aren’t comfortable putting

themselves in debt in order to own a car. Of those

that do own cars, many wouldn't change their

lifestyles to own a more expensive or newer model.


“Whilst having at car as a young person can be seen as cool and even 'grown up' most young people get by without and with the abundance of new luxury goods available for them to wish for cars are taking a back seat as unaffordable luxuries compared to the latest computers, phones and tablets.”

Emily, 19


Executive summary

ACCESS OVER OWNERSHIPWith the rise of car sharing options available to

Millennials living in the city, ownership is not the

only way to drive. For both financial, practical and

environmental reasons (in that order), Millennials

are choosing to experiment with shared ownership

or short-term rental clubs.

Car ownership is becoming less of an aspiration

and less of a norm for Millennials, who are much

more acclimatised to subscription services and

access over ownership. The Spotify and Netflix

generation is as comfortable sharing and

subscribing to their driving options as they are to

their entertainment.

Owning the coolest car on the block is an

aspiration for some Millennials, but this aspiration

is becoming diluted by newer goals in life. Owning

the newest iPhone, starting a business, going

travelling and moving to the city are examples of

goals that take priority over car ownership for

today’s Millennials.

The idea of car ownership is not lost - many

Millennials talk about owning a car in the future -

but there are many other options for mobility

today, which means car ownership can be put off

for now.


“I think younger generations value experience rather than ownership. Look at Snapchat - they value the moment that day, rather than having a history (such as history/posts/photos on their Facebook wall). In my opinion they like to experience and share the moments rather than to own things.”

Ayako, 25


Executive summary

READY FOR DISRUPTION

Throughout the research, we found that

Millennials recognised the need for change and

disruption in the auto industry. They hold a belief

that traditional and long standing brands will have

to innovate and disrupt themselves in order to

survive in a market that is changing rapidly.

When we asked Millennials which brands they

thought would be leading the automotive industry

in 10 years’ time, brands that stood out were: Uber,

Tesla, Google, BMW, Apple and Toyota. In the same

task we asked Millennials to select the companies

they considered to be the most innovative. The

results were almost exactly the same. It is clear

that a perception of innovation for Millennials

equals long-term success.

Automotives: are you up to the challenge?


“Travel will be more collaborative, more shared. I think the focus will be less on full ownership…younger generations are less bothered about owning stuff”

Nicole, 34.


Section two

The collaborative economy

A transformative shift

Consumption and exchange



A TRANSFORMATIVE SHIFTIt’s important to understand that the trends we saw

in our report were not unexpected and have

happened as part of a much wider trend called the

collaborative economy.

More than half of the western world has woken up to

a new way of getting the products and services they

need.

The collaborative economy, also known as the sharing

economy is the biggest shift in the business landscape

since the advent of the Internet itself. And just like the

Internet, it’s changing the rules for how we market,

sell and innovate.

To compete in this growing economy, established

corporations must develop new strategies.

In this new economic reality, the world’s largest

hospitality brand owns not a single room or hotel. The

world’s largest car service owns not a single vehicle.

And one of the world’s largest retailer is driven by

people buying and selling preowned goods.

These companies — Airbnb, Uber and eBay — are just

three players in a much larger shift that is

transforming our lives, our economy and the way we

do business.



CONSUMPTION AND EXCHANGEThe collaborative economy is an economic movement

where common technologies enable people to get the

goods and services they need from each other, peer

to peer, instead of buying from established

corporations.

This new form of consumption and exchange is not

only here to stay: it’s raising customers’ expectations

for all businesses.

This process of disruption isn’t new. A decade ago, we

saw how physical CDs gave way to illegal MP3

sharing websites, which eventually became the

dominant marketplace known as iTunes.

In recent years, we see that ownership of digital

media is giving way to streaming services and on-

demand media via membership and subscription

business models.


Efficiency

I need

Trust

You have


So does that mean that the big fish

are going to end up eaten by the

might of the heavily funded and

nimble minnows?

Perhaps. And almost certainly for

those unable to adapt.

But at Different Spin, we really

believe smart traditional OEMs can

find your own opportunities to offer

on-demand products and services,

create peer-to-peer marketplaces

and enable platforms that bring your

customers closer to your brand.

That you can also find ways to make

your existing products and services

more appealing to customers who

would otherwise shift to sharing, and

identify opportunities to partner

with sharing services to offer greater

value to your customers.

Section three

Co-Lab Innovation Framework

Access over ownership

Exchange, share and trade

Secure, easy and fast



INNOVATION PROGRAMME

•  Consumer•  Market•  Product

•  Prototype•  Pilot•  Evolve

•  Brand•  Launch•  Marketing

•  Business model•  Education•  Inspiration

GARNERDEEP

INSIGHTS

BUILDINNOVATIONCAPABILITIES

DEVELOPPRODUCT

OR SERVICE

CRAFTCONSUMEREXPERIENCE

INNOVATION STRATEGY



AREAS RIPE FOR DISRUPTIONSo first of all, we know that there are clear areas

that are ripe for disruption. And this is your first

port of call when thinking about innovation within

your business:

COMPLEX EXPERIENCES

Where do consumers have very complex

experiences? On your website, when visiting a

dealer? When trying to configure a new car? When

actually trying to purchase?

BROKEN TRUST

Where has trust been broken? The recent VW

scandal provides a ripe feeding ground for

disruption and innovation. How can you play on

your trust credentials?

REDUNDANT INTERMEDIARIES

Where are there redundant intermediaries that

complicate the consumer experience and make

prospects and customers jump over unnecessary

hurdles. The dealership experience is ripe for

radical disruption or obliteration.

LIMITED ACCESS

Where is there limited access? For example how

can a premium brand create a product or service

that’s accessible for all?



THREE PROVOCATIVE QUESTIONS1. How can you create models that facilitate access

over ownership?

2. How can you enable people to exchange, share

and trade as directly as possible?

3. How can you remove friction from the system to

make it secure, easy & fast?



ACCESS OVER OWNERSHIPThe findings of our Millennials research shows

clearly that Millennials, as the next generation of

car buyers value access much more highly than

ownership. We’ve seen that car ownership is

becoming less of an aspiration and less of a norm

for Millennials, who are much more acclimatised to

subscription services.

Owning the coolest car on the block is an

aspiration for some Millennials, but this aspiration

is becoming diluted by newer goals in life. Owning

the newest iPhone, starting a business, going

travelling, moving to the city are all examples of

goals that are taking priority over car ownership

for today’s Millennials.

So the question you should be asking yourself is

how can you create models that facilitate access

over ownership? This is about shared access. You

need to reimagine the ways customers can access

the benefits of your product or service without

having to own it outright. And how do you

profitably monetise that?



MOVER


Mover is Ireland's new peer-to-peer car hire

service. They launch nationwide in early 2016

and are currently offering free enrolment to

car owners in both Limerick and Dublin to help

drive early scale. Their pitch is “enrol your car

with us now and find out how you can earn

money by hiring it out to other Mover pre-

vetted renters.”


BMW DRIVENOW


DriveNow is a joint venture between BMW and Sixt that

provides carsharing services in several cities in Europe and North

America.

Instead of dealing with insurance, parking and maintenance,

customers can rent a 1-series electric vehicle at a designated lot

in urban areas, and drive the car to another location, then

promptly leave the vehicle for another person to access.

First-party apps for mobile devices allow users to locate and

reserve vehicles. When reserving a car online, the customers are

able to see the car's fuel gauge (gasoline-powered cars) or the

battery's state of charge (electric-powered cars), so if the

customer wants to go for an extended drive, they can find the

right car for that trip.

As of November 2014, DriveNow operates over 3,780 vehicles,

which six countries worldwide and over 330,000 customers.


EXCHANGE, SHARE AND TRADESo on to our next question, and one that is a lot

more challenging for the traditional OEMs to

imagine.

How can you enable people to exchange, share and

trade as directly as possible?

]

The obvious first thing that comes to mind is the

role of dealerships in the customer experience.

We’re going to be covering that at length in our

final report of the series when we look at car

buying, retail and aftersales innovation.

So setting dealerships aside until 14 December the

question is how can you reinvent ways to enable

people to connect directly with who or what they

need?



BLA BLA CARBlaBlaCar is a trusted community marketplace

that connects drivers with empty seats to

passengers looking for a ride. Over 10 million

people use BlaBlaCar every quarter creating an

entirely new, people powered, transport

network.

With a dedicated customer service, a state of

the art web and mobile platform, and a fast-

growing community of users, BlaBlaCar is

making travel social, money-saving and more

efficient for millions of members.

The numbers are astonishing:

•  20 million members

•  19 countries

•  10 million travellers per quarter

•  Over 2 million trips available in the future at

any given time

•  Over 3 billion miles shared

•  An estimated £216 million saved by our

drivers every year

•  An estimated 1,000,000 tons of CO2 saved

•  Average car occupancy 2.8 people (vs 1.6

average)

What learnings can you take from BlaBlaCar for

your business?



JUSTPARK


JustPark is an online platform that enables private individuals

and companies hire out vacant parking spaces by the hour or day,

setting the rental fees themselves.

JustPark levies a service charge of between 6% and 40% of the

total rent, depending on location and size. In return, it handles all

dealings with the "tenant" and offers a money-back guarantee if

the reserved parking space turns out to be occupied.

250,000 customers already use the online search function, which

covers around 60,000 parking spaces at the present time.

Plans exist for further rapid internationalisation in collaboration

with German auto maker BMW, which signed up as one of the

company's investors in 2011. End-to-end mobility management

will be available in the future, with BMW offering customers of its

DriveNow car-sharing operation vehicles by the minute or hour

and a parking space near their destination.

How can your business partner with a start-up to develop

profitable services like BMW have?


SECURE, EASY AND FASTAnd finally our last provocation:

How can you remove friction from the system to

make it secure, easy and fast?

Traditional automotive remains complex,

cumbersome and a painful buying experience. Our

upcoming research project explores the extent to

which a disenfranchised group is alienated by the

current system. This is a group of decision makers

with massive buying power that is currently

underserved by the current system. Who is this

untapped potential? Women!

In this upcoming open research project, we get

under the skin of the passion and pain points of

four different groups of female consumer:

Mums, Millennials, Empty nesters, Professionals.

Insight gathered from this extensive research

project will be used by the automotive sector to

remove friction and make the service they receive

secure, easy and fast.

But back to the question at hand - simplicity is key:

How can you refine products and services to their

simplest and most transparent form?


“Owning a car used to be a symbol of freedom. Whilst it still is, it has definitely also become a heavyweight financial burden.”

Melissa, 27



FORD CREDITFord has developed an interesting approach to

finance that helps to overcome the friction caused

by the cost of ownership.

The car giant offers a creative financing program to

encourage new buyers to rent their new Ford car

to peers on Getaround, a P2P online marketplace.

This significantly reduces the cost of ownership.

Let’s find out more…PLAY VIDEO

Another example of an OEM partnering to benefit

from the opportunity of start-up innovation.


Product innovation: saving money, saving lives and disrupting an entire industry

INSURE THE BOXInsure The Box was created by insurance

stalwart Michael Brockman to solve a

problem being faced by the insurance

industry.

At a time when insurance premiums

regularly hit the £4,000 mark for newly

qualified young drivers, Michael and his

team set out to reduce these cost

prohibitive premiums whilst making the

roads safer for young people and saving

lives.

Telematics represented that solution, a

black box installed into your car that is

connected via the mobile network to an

online portal tracking your driving

behaviour. The portal suggests ways to

drive more safely and actively rewards safer

driving with lower premiums.

The behavioural change benefits of the

online portal are proven to deliver an

average 35% reduction in risk in the first 11

months of driving with a black box.

In addition, Insure The Box has an auto alert

system in place that has been finely tuned

over the last five years so that the black box

can detect the severity of a collision and

where appropriate, activate emergency

services. Insure The Box deploys the

emergency services around 20 times a

month to crash sites.

Insure The Box represents everything the

automotive and mobility market needs to

get right to engage Millennials. Solving a

real problem using technology, establishing

a highly personalised relationship with the

customer, underpinned by an authentic and

meaningful mission to save money and save

lives.


"The new frontier of marketing will be service, not sales. Or, in the parlance of CRM, retention rather than acquisition. Additionally, as business becomes more subscription-based, service becomes dramatically linked to continuing revenue. This is a huge greenfield that will grow as more, and better, intelligence starts to flow back and forth between customers and companies.”

Doc Searls,Harvard Business Review, November 2015


Section four

Elio case study

The product

The proposition

The pricing model

The finance package


Elio case study

THE PRODUCTSO WHAT HAS ELIO GOT SO RIGHT?

1.  It’s American made

2.  Achieves an incredible 84 MPG

3.  It’s engineered to deliver the highest safety standards

4.  All for an unheard of base price of $6,800

5.  AND they’re using blue chip suppliers which means

servicing is very inexpensive


Millennials in the future: driverless vehicles

THE PROPOSITION

“In a nutshell, Elio is a stand alone solution for today’s generation of drivers.

Petrol prices are constantly spiking. Cars themselves cost more than houses did a few short

years ago. And in case you haven’t noticed, the world and personal space along with it is

shrinking.

We simply need to evolve to more efficient and practical forms of transportation. We need a new

way to get around.”

Elio proposition

A proposition based on an authentic vision for the

future of mobility. One which doesn’t have it’s head

in the sand but sought to identify and solve real

people’s mobility challenges and needs.

But more than this, Elio claims that the positive

impact of the brand ripples well beyond personal

owner benefits. It will generate thousands of jobs

while setting a whole new standard for

environmental friendliness.

Elio is starting a mobility movement, not just selling

a car.

#AlterTheCourse


Elio case study

THE PRICING MODEL


The pricing model is ingenious – bare in mind that

the car isn’t even in production yet. There are two

levels of deposit:

1.  I Want In

2.  I’m All In

The ‘I Want In’ option is refundable and the ‘I’m All

In’ option is non-refundable. You can put a deposit

of anywhere from $100 up to $1000.

What’s really interesting is that your commitment

level dictates your place in the queue. People who

are ‘All In’ and put down a non-refundable deposit

of $1000 are at the front of the queue and get the

first models off the production line.

The non-refundable lower deposit amounts are

next in the queue and then come those who opted

for a refundable deposit. Last in the queue are

those who put down a refundable deposit of $100.

Elio case study

THE PRICING MODEL


And last but not least, Elio have developed a really

interesting way of financing the purchase which

again is a further expression of the vision of the

brand.

How can a finance product be an expressing of a

vision? Here’s how:

My current car gives me 25 miles to the gallon and

let’s say for easy maths the Elio gets 75 miles to the

gallon (target is 84). So theoretically just my fuels

costs are going to be three times less compared to

my current vehicle.

They are launching an Elio credit card and the deal

is you buy all your petrol with it. And what will

happen is let’s say you spend $50 on petrol what it

will do is charge you $150 on your credit card i.e.

what you would have paid to travel the same

distance in your previous car. But that 2/3 will go

towards paying off your Elio.

Your fuel savings pay for the vehicle.

Elio case study

WHAT DOES IT TAKE?


How can you make the product, brand and overall

car buying and ownership experience so

compelling that you can deliver $290 million in

pre-orders without one vehicle on the road?

Elio are providing services that align with the

brand promise, they are providing experiences that

are all encompassing and they are selling cars that

haven’t yet been built because of it.

It’s this kind of innovation that the car buyers of

the future are looking for. A complete reimagining

of the mobility experience:

•  Access over ownership

•  Being part of a community, a movement

•  An experience so compelling that ownership

suddenly becomes an option again.

Coming February 2016

Automotive fails womenThere is a gap between the automotive industry’s comprehension of

women and the reality. Women don't show their true experiences in

traditional focus groups and via commonplace research methods. As a

result, marketers and product developers are failing to deliver

products, communications and experiences that truly resonate with

women. And this is effecting the bottom line.

In this ground-breaking research project, we get under the skin of the

passion and pain points of four different groups of female consumer:

1. Mums

2. Millennials

3. Empty nesters

4. Professionals

Insight gathered from this extensive research project will be used by

the automotive sector to truly engage with woman in a meaningful

way and develop innovative products and solutions that solve their

problems and meet their needs.

SUBSCRIBE ATdifferentspin.com/subscribe


PRODUCT DEVELOPMENT

•  Market entry and demand studies

•  Product innovation

•  Product testing

•  Crowdsourcing product ideas

•  Trend analysis

CONSUMER INTELLIGENCE

•  Target market analysis

•  Audience profiling

•  Conversation analysis (social media)

COMPETITOR INTELLIGENCE

•  Industry analysis

•  Competitor benchmarking

•  Gap analysis

MARKETING INTELLIGENCE

•  Campaign development

•  Creative testing

•  Campaign performance &

measurement

•  Attribution modelling

Do you really understand

your audience?Bloom provides in depth and human research using Hark, our global insights

community. Made up of over 5,000 active participants who can be segmented

demographically or psychographically.


Dude, where’s my car?

Product & Marketing

Innovation Deep Dive

Different Spin and Bloom Worldwide 2015

different-spin.com

bloomworldwide.com

This work is licensed under the Creative Commons

Attribution 4.0 International License. To view a copy

of this license, visit

http://creativecommons.org/licenses/by/4.0/