The auto industry is a high-stakes and highly regulated industry, with the automobile arguably the most complex consumer product produced today. The average U.S. purchase price for a new vehicle is just above $36,000, making it the 2nd-largest purchase a consumer makes in his or her lifetime. A wrong bet on even the smallest of features could result in a multimillion-dollar error.
Bearing this in mind, in 2014, a newly appointed CEO of a nearly $150 billion manufacturer laid out an ambitious growth plan to increase market share and improve margins. While on the surface, it would appear that offering an unlimited amount of feature combinations would lead to growth, it was carving into profitability and undermining the very notion of consumer choice.
While seemingly a customer-friendly approach, their existing production model was skewed toward content, and design, largely relying on technology and variable market factors such as population density, disposable income, commodity pricing, and GDP growth.
To mitigate risk, we flipped the perspective by electing to leverage the wealth of data associated with the buying habits of their current and historic customer base, and linked this data to stated preferences and pain points acquired through primary research.
From there, a predictive model was developed to determine the subsequent impact of fluctuating market conditions. With buy-in from finance, product planning, engineering, and innovation teams, this disciplined approach enabled them to streamline the number of configurations for their product lines. Not only did this result in significant reduction of operating costs and efficiencies, it led to a better experience for buyers often overwhelmed by an inordinate amount of choices.
Yet great strategy doesn’t always translate to great execution. In planning the roll-out of this strategy, their leadership took a critical next step. They needed to ensure that this model translated into better decision-making and action. Knowing that this blueprint for success was highly technical in nature, we partnered with cross-functional leaders to understand the diverse audiences receiving the recommendations; the decisions they needed to make based on the inputs; and the level of detail necessary for them to internalize, and act on, the information.
The resulting roadmap continues to inform and influence go-to-market strategies, from pricing, to marketing, to dealer inventory and promotions. And perhaps most important to the company’s shareholders, after an initial boom in market share, despite a deceleration of category growth, our client experienced significant gains in margins, enabling growth even in times of slowing sales brought about by a volatile market.
