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Digital Replaces the Automobile

I have been thinking about this for quite some time.
Then via Twitter I came across this Adage article about how the internet or let’s say digital media in general is having a desasterous effect on the auto industry.
Sounds far-fetched? Maybe, but there is truth to it as I will prove.

SOM_Marketingberatung_digital_replacing_auto

THE RISE OF CARS

Beginning in the early 19th century cars began to replace horse and carriage. Slowly but steadily, and as productivity improved and cars became more affordable (think of the Ford Model T), the success of automobiles could not be stopped anymore. Until now. Sure, cars have not yet been replaced by small convenient electric aircraft or such, but they are under pressure. From a medium no one could have imagined it would be a threat..

HOW THE CAR EMPOWERED US

Some 10, 20 or even 40 years ago, a car was the dream of any young man or woman. Why? It is a symbol of freedom, it allows you to move where you want when you want, and thus enables you to communicate in person with people living too far away to walk. It enables you to haul home goods that you bought elsewhere, it takes you to your job interview and it may be the romantic setting on a first date. You had to have a car or you where nobody.

Still the case today, you might say. Well yes, but only to some extent.

WHERE DID ALL THE DRIVERS GO?

The number of young adults who have no driver’s license is decreasing. Just as the article on adage.com nicely illustrates, this is no coincidence but rather a strong tendency away from the car. This does also apply to my personal network. People don’t get their driver’s license because they are unable to drive properly. No, they simply do not need it and save the money for other things. Coming back to the graphic in the adage.com article you should be aware, that in the U.S a driver’s license is very easy to obtain (financially and concerning the test – if this is good like that? Well the auto lobby surely would not want it any other way). To compare: in Germany an auto driver’s license can easily amount to EUR 1000. This would at least partly explain why less and less people get the license. However, for the US and that is the country the adage.com graphic refers to, it is no explanation at all.

Now why would young adults shy away from all the wonderful possibilities a car offers you? Do they no longer have the needs? They do. But they found an easier, more convenient, yet digital way to cover all the things mentione before:

-symbol of freedom
-go where you want when you want
-communicate in person with people living too far away to walk
-haul home goods that you bought elsewhere
-job interview
-setting on a first date
-be someone
-…

HOW THE (MOBILE) INTERNET TOOK OVER

Internet and mobile internet via your cell phone allows you to be free. You can do anything at any time. From shopping for exotic products to watching a UStream livestream of a highschool basketball final.
You can virtually access any point on this planet via Google Maps and billions of photos and videos at your disposal. You want to see how huge the waves in Hawaii are – surely someone has been there and shares his photos, videos and impressions with you. The internet allows you to communicate with anyone in the world – whether you are somewhere in the Bavarian Alps or downtown Manhattan. Skype and other applications allow to even see each other live. You can literally purchase everything online. From a new car to groceries to a new movie – many goods even come with free shipping right to your apartment door. Job interviews or at least first level interviews can easily be undertaken via video conference. No need to drive60 miles just to find out the position is absolutely not your piece of cake. Dating today does no longer take a car to take the girl to the movies or the diner as we know it from the 50s and 60s movies. Instead online dating platforms have become highly successful and even come with a money-back guarantee (now how weird is that?).
And to some it up. While before identification happened via clothes, your car, your peers, this has considerably moved online. Today, teenagers as well as young adult identify themselves by their myspace or facebook profile, the type of cell phone they have and which b(r)ands they favor. As a recent Southpark episode nicely illustrated: if you have no profile and or no friends you barely exist.

Sure, you can also show off your car. But think of young people and how they are searching for their own identity via brands etc. An iPhone is much cheaper than a car, and very often today, a car does not impress as much as an iPhone, the latest apps or how many friends you have on facebook. Another aspect is that we tend to move to highly populated cities. Who needs a car, when you have some 50 different subway lines, another 50 bus lines plus the train system? You often do not even have the possibility to demonstrate your car to your colleagues because many times you do not know where you will be parking the next day (if there is no company parking lot). And lastly: cars cost you money even when they are standing in the garage. In times of economic uncertainties you would rather not invest too much into a car.

You may have realized that I have spoken of different groups of people i.e. potential consumers. Teenagers who are allowed to drive a car much earlier in the US than in Europe and then young adults and adults in general. The latter may still be the more easy-to-handle target group with a fixed value set in their mind and often times strong loyalty to auto brands (and their heritage). But ask the younger generation! Cars have become much more similar in recent years. It is not longer the US brand vs. Japanese brand fight. The market is much more diverse, intertwined and thus confusing for the consumer. Is Subaru American? Jaguar still British or really Indian now? Does the Mini Cooper really have a Toyota engine? And is it true that Japanes cars are built in the U.S. by U.S. workers?
This industry is chaotic.

AND FINALLY: CARS ARE BAD

The car today has lost some of its power. And the world has changed leaving less space for our cars. What I have not yet mentioned is the entire environmental issue. Cars today are considered harmful. They endanger our future and that of our children. New technologies are being demanded by the public. As the world around us has changed so cars have to change to maintain their role in our lives.

THE CONSEQUENCES FOR CARS AND AUTOMAKERS

What does the changed environment mean for automobiles?

-cell phone-like apps for the car
-connecting the digital sphere with the car sphere (colleagues may not see your car on the road, but on social networks)
-hybrid, e-cell, fuel cell and other technologies to take away the negative touch
-alternatives to owning a car, such as car-sharing
-mobility on demand, e.g. via a rental car when you need one
-cars and auto brands have to go online and into Social Media (Don’t loose touch of future target groups!)
-cars have to identify new „reasons why“ to persuade consumer to purchase a car
-brand facets such as sustainability have to be pursued and must be cemented as core brand facets
-auto brands have to make sure their brand can be understood by consumers

Ford focusing on consumer generated advertising (to increase authenticity?)

The following article has been posted by David Kiley on BusinessWeek’s „The Auto Beat“ and deals with Fords renewed focus on its 2007 „Drive One“ campaign where they invited consumers to try their cars and share their experiences with the rest of the country.

Advertising: Ford Turns Back To Owners To Tell Its Story

Posted by: David Kiley on October 08

Ford Motor Co. is sticking with its “Drive One” ad campaign launched in 2007, but infusing a little more emotion into the effort. But don’t expect to see people gushing on camera about their Ford.

The automaker is at an interesting crossroads. It clearly has momentum in the marketplace after being the only one of the three Detroit automakers to escape Chapter 11 and government bailout in 2009. Sales of Ford cars and trucks have fallen by 21% to 1.058 million units in the first nine months of 2009, but the brand’s market share rose to 13.5% from 12.5%. The Ford brand’s drop was less than the nation’s top-selling Toyota brand’s 26% drop in sales.

But there is a feeling inside the company that, despite the terrible economy and resulting calamity in the auto industry, Ford’s time is now.

For the past year, the company has been focused on pitching very rational messaging: fuel economy, quality, technology like its Sync telematics system. Ford’s top marketing executive Jim Farley says the strategy has been to keep giving the public rational reasons they need to consider, care about and buy a Ford.

As Ford’s own research shows, too few people associate the feelings of “cool” and “savvy” with the purchase of a Ford. It has to change that, and accelerate its efforts, if it is going to fully take advantage of the present weakness of GM, Chrysler and even Toyota.

The slogan, “Drive One,” has been met with a mostly tepid reaction from the public. It ties into CEO Alan Mulally’s mantra that he has driven into the company—“One Ford.” That refers to the idea every employee must embrace that it is one worldwide company and brand, not a portfolio of companies the way it used to be: Ford North America, Ford Europe, Ford Asia-Pacific, Jaguar/Land Rover, Volvo.

But there hasn’t been a lot of blood flowing to the campaign, or the slogan itself.

The new push on “Drive One” includes several interesting pieces. First, the automaker will begin this week running what will eventually become at least 45 15-second ads on TV and the Net which show real people engaging and talking about some aspect of a Ford. These ads will be overlaid the usual packet of 30 and 60 second ads for models, as well as dealer advertising.

The look, energy and voice of these 15 second ads seem just right. Ford has momentum both in sales and perception, and these very honest and engaging ads come off as breathing some new wind into the sails.

The article can be found at: http://www.businessweek.com/autos/autobeat/archives/2009/10/advertising_for.html

Ford not recognized as a German brand

The drama about German automaker and GM subsidiary Opel is not only an advantage for rivaling automakers. Although profiting from consumer uncertainties by winning former Opel drivers, the worries and the public discourse about the future of the Opel brand also did harm Opel rivals. According to a current FAZ article, a central insight for Ford was that Opel not Ford is generally being perceived as the more German of the two brands. Thus it can be said that the Opel crisis also helped Opel to strengthen consumer loyalty and to interest patriotic Germans for their affordable vehicles. To Ford this poses a completely new marketing challenge. Still suffering from the image of producing conservative, emotionless cars, sympathy for Ford may have further decreased. But it should also be mentioned that in the US as well as in Germany, Ford’s management had taken early and wise measures to prepare for the current auto crisis. Thus a scenario similar to that of Opel would not seem credible (begging for givernmental aid,…). So Ford’s marketing challenge for the future will be to produce more emotional cars, such as the Insignia or new Astra and to improve its perceived ‚German-ness‘.
One consequence of the current auto crisis might be that that markets which formerly were a taboo are now considered attractive segments. Ford and even Fiat (together with Chrysler) are considering entering the US automobile market. The cause? Perhaps this will improve competition and contribute to the overall quality of US makes. Still today, these millions of cars American automakers are producing each year simply won’t sell anywhere but the US. Europe is simply much more advancaed and competitive. If this is the scale for US makes, then and only then, there is a chance that they will survive in the long run.