The new car market battleground is experience, not badge

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JEREMY MAGGS: On now to the automotive industry and South Africa’s vehicle market is shifting fast, but not necessarily in the way that many expected. It’s not just cheaper Chinese and Indian brands that are disrupting the market.

It is, I think, a fundamental shift in what consumers now expect for their money. High spec, feature rich vehicles at lower prices, and that is redefining value, and it’s forcing even luxury brands to rethink what brand loyalty actually means.

The real battleground, some say, is no longer the badge. It’s about the experience.

This is a fascinating topic of conversation. It affects all of us who sit behind the wheel of a car every day.

Liezel Jonkheid is director at the Consumer Psychology Lab. She’s been with us before, and let’s welcome her back to the programme. Liezel, a warm welcome to you. Is this really about price or, as I suspect, something a whole lot deeper.

LIEZEL JONKHEID: Jeremy, I think the price is a real, significant battlefield.

But in the luxury market, I do think there is another factor that comes into play, and I think it is the realisation of value, and that the baseline for expectation is shifting.

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JEREMY MAGGS: When we talk about baseline for expectation, what does that mean?

LIEZEL JONKHEID: Well, what we see is that because feature rich products are coming onto the market, the design specs are very similar to luxury brands. It shifts the expectations because you already see that in the volume segment.

So it becomes accessible and attainable and then when you look at the price point, it becomes like the debate whether the rational reason will be the main decision-making factor.

JEREMY MAGGS: It also tells me, Liezel, that the entire definition of value then has fundamentally changed.

LIEZEL JONKHEID: I don’t think it has changed completely from before in the luxury segment, but I think it becomes really relevant in the luxury market because the reliance on the brand was always the primary focus.

Although the segment generally forms their decision on a different basis, but at the moment we are seeing that the brand alone doesn’t help to retain a customer.

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So when they look at the total value, they look at the brand experience, the ownership experience as part of the value that they are seeking, and they are constantly wanting to reassure themselves that they made the right decision on paying more.

JEREMY MAGGS: So are we seeing then the complete demise of brand-driven loyalty within the vehicle segment?

LIEZEL JONKHEID: I don’t think it’s a demise. I think it’s under pressure.

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I think a lot of brands are maybe reliant on or slow to change in adopting a differentiated experience from that which they built into the ownership experience.

If I just think of our own environment, working with the luxury car segment, we see that a lot of the same approaches are still in place. If you collect a vehicle when you’ve just bought it, it’s the same frills that come that have been there forever.

Also, the volume market has adopted the same techniques. So it’s not just in that specific moment that you need to differentiate, it’s the entire experience. You have to refocus on whether the experience is the driver for the luxury market.

If a consumer decides on whether to (buy) in the luxury market, given that a feature rich design similar product is available, then the only differentiator then will be the brand experience.

JEREMY MAGGS: Liezel, that word experience is a very overtraded word, and you’re arguing that experience matters more than ever these days. In practice, tell me what that means.

LIEZEL JONKHEID: Well, I think for any brand, but in particular, we’re talking about the automotive industry, you have to consider what is your competitive offer. I don’t think there’s enough consideration in what those components are.

Read:
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So if you think of the drive on effortless experience, where the digital to showroom transition is seamless, whether the focus really shifts from being absolutely a personal, relationship based, emotionally intelligent engagement and making every moment matter, instead of assuming the consumer will accept whatever is offered as it always has been.

JEREMY MAGGS: Do you think that we’ve reached the point where luxury brands, if they don’t improve their game, could lose customers permanently and not temporarily? In other words, might they be underestimating the shift to their own detriment?

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LIEZEL JONKHEID: I think it is a reality. We see this in the market.

I actually mentioned in a piece that I wrote of the experience of a luxury brand owner shifting into this high feature price point product and then, due to the experience, decided, okay, this doesn’t work for me, I’m going back into the luxury market, but then doesn’t choose the same brand.

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Meaning that the badge alone, the logo that represents so much, did not attract the customer back into that space. That is because the experience did not live up to the baseline experience that we see across all high end or differentiated brand experiences.

In other words, if you interact with any brand and it is easy, personal, they are intuitive, they know who you are, they align what you need with what they offer to you, whether everything is made easier for you. Then you will entice that loyalty.

It’s not a given anymore, consumers do not give loyalty unconditionally.

I don’t think brands, especially in a luxury market, are really aware that this is starting to erode repeat loyalty.

JEREMY MAGGS: Well, lots of questions to ask before you purchase your next vehicle. Liezel Jonkheid, thank you very much indeed, director at the Consumer Psychology Lab.

#car #market #battleground #experience #badge