Introduction
In this case study, the author discusses the efforts of Jaguar and Land Rover to change their model and integrate customer-centric practices. The main problems in the case study are the disruptions in the automotive industry that will affect the ownership patterns and the types of vehicles that the customers choose. Jaguar has to transition from a product-centric strategy to a customer-centric approach and use forecasting methods that will help overcome the uncertainties and disruptions this industry is facing. The list of issues associated with the case study problems is the following:
- Restrictions of governments directed at reducing emissions and congestion
- For example, the Norwegian government will forbid the purchasing of all new non-electric cars by 2050. This means that manufacturers are pushed to design and produce vehicles that operate on renewable energy. Other states issue restrictions that target the reduction of CO2 emissions, which have already affected Volkswagen. Notably, the case study indicates that only a few manufacturers, such as Toyota and Renaut, are on track to comply with these regulations, while others are falling behind.
- Changing ownership patters
- Consumers now consider alternative ownership approaches, for example, co-sharing cars. As the case study suggests, customers now can order cars for a certain amount of time, which relieves them from the burden of maintenance. In some states, car owners can give their cars to others through car-sharing services. Hence, consumers have flexibility in either choosing to purchase a car with all upfront costs or pay on a per-use basis.
- Economic crisis, both in 2008 and the potential disruption after COVID-19
- Car manufacturers’ revenue and volume of sales decreased after the economic crisis in 2008. The same issue may affect them after 2021.
- The demand from the Chinese market is plateauing
- According to the case study, the Chinese market has been favored by car manufacturers for a while. However, recently, the quality of cars made in Chine by local companies has improved. Land Rover and Jaguar opened a manufacturing facility in China to address the increasing demand in this state. One potential cause is that the general life of a Chinese vehicle increased from 3 years to 4 years.
Solutions
The main problem in the Jaguar case study is the need to transition to a customer-centric model. One solution is to focus on data collection from the manufacturer’s customers and potential car owners to predict the demand. The manufacturer will focus on collecting data and creating systems that allow them to maintain communication with their buyers through the process of selecting, purchasing, using, and disposing of their vehicles. Alternatively, Land Rover and Jaguar can revert to alternative ownership models, where the company cooperates with car-sharing services instead of focusing on individual buyers. In this case, the manufacturer will have to reduce costs and ensure that their vehicles are more durable. The following is a list of potential solutions:
- Leverage data collection for decision making.
- Offer alternative ownership models to customers, such as car-sharing, to address the decreasing demand.
Advantages and Disadvantages of the Solutions
The advantages of data collection are the ability to make decisions that were based on empirical findings and not speculations. Additionally, this approach can help address different areas of Jaguar’s work, such as designing new vehicles, developing new technology for electric engines, as well as choosing models for selling cars, and cooperating with car-sharing services. Jaguar’s Customer Relationships manager is already creating a network of data collection and analysis tools.
The disadvantage is that data cannot be used to make predictions about sudden disruptions. For example, regardless of the quality and quantity of information collected by Land Rover and Jaguar, their specialists would not be able to predict the global pandemic and its economic consequences. Hence, there are limitations to the data forecast, such as their ability to help the management address sudden disruptions, but in a stable economic and social environment, they aid in predicting demand and preferences.
The advantage of focusing on car-sharing and cost reduction is that the potential customers would be less demanding. Their main concern would be to get from point A to B, and therefore, Jaguar and Land Rover would have to invest less in customer relationship management. However, the disadvantage is the potential losses associated with fewer people buying these cars and the impact on the quality and brand image that cost reduction may have.
Product Launch Cycle
The product launch cycle is important because it allows the management to make decisions depending on the specific stage. For example, in this case, study, the car manufacturer used car clinics and customer feedback during the development stage to understand how consumers perceive their new designs. During the maturity and decline stages, one can offer customers new cars to retain them.
Typical Customer Journey
For the automotive industry, the typical customer journey begins with a person deciding to choose a vehicle, reviewing the market options, visiting dealerships, ordering a car, receiving it, maintaining the vehicle, and selling it to get a new car. In the case study, Sulek “visualized” the customer journey when building a new CRM system for Jaguar and Land Rover. Understanding the customer journey is important because it shows the different stages that an individual goes through when owning a car. In the case study, Sulek offered the marketing team to contact car owners once their leasing contracts expire to help them select a new option, which is a good example of how customer journeys can be used by retail buyers.
Trends
Some of the recent trends in the automotive industry are the increasing popularity of driverless cars. For example, Tesla has been working on its autopilot and has successfully launched it in several states (Morris, 2021). Driverless technology has a strong potential for improving the road safety and comfort of passengers. Moreover, another trend is driverless taxis developed by companies such as Zoox (Hill, 2021). With this option, a potential customer would not need a car or a driver’s license. Finally, the trend is the use of car-sharing services, which allows one to avoid purchasing a vehicle instead of paying a fee on a per-use basis (Scorgi, 2021).
They will affect individual carmakers because they will have to integrate self-driving technology into their production process to address the demand for such cars. Additionally, these trends can affect the overall demand for new cars.
One possible solution to the problem is to change the image of ownership of a car. Nowadays, many people use car-sharing and ride-hailing services due to the convenience and low price. To motivate people to buy cars instead of the mentioned-above services, it is crucial to create a new image for car ownership. Improving the reputation of vehicle purchasing could be done via marketing and advertisement strategies. The disadvantage of the method is that potential customers might not be satisfied with the agenda and continue to utilize car-sharing and taxi services. The second solution is to implement better and cheaper types of vehicles in production.
Today, companies already tend to create more electric cars which could be the answer to the problem. They are easy to utilize and safe for the environment. However, the disadvantage of the method is that electric and self-driving vehicles are still quite innovative technologies, and it is too early to talk about the results of their implementation. Therefore, the mentioned-above solutions have both advantages and disadvantages in their utilization.
As stated in the case study, despite the number of electric vehicles being at 1% of the whole automotive market, the potential of this technology is promising mainly due to two reasons. The first one is the lack of harmful emissions from cars, and that is why some countries plan to switch to electric automobile consumption. However, some governments are concerned about the economic side of car production, since they would have to shut down the businesses producing regular vehicles. The second reason also revolves around the financial component of production. In general, electric automobiles are cheap and easy to build due to the reduced number of parts compared to regular cars.
That is why electric vehicle production might be a sustainable model if the company discontinues the sales of automobiles with IC engines. However, the problem is that the production of electric vehicles requires specialized training, and the workers would have to improve their qualifications or lose their jobs. Taking these two reasons into account, one can assume that focusing purely on electric vehicles is a sustainable model.
Self-driving cars might change the automotive industry as a whole shortly, however, they have a few unresolved problems. First, the artificial intelligence of robotic cars is still in need of further development. While it is true that self-driving vehicles are convenient and reduce the cost of transportation, they might have unexpected bugs in the programs. For instance, according to the case study, a pedestrian was killed in a crash with a robotic car in Arizona in 2018. It demonstrates that this technology still requires more work and elaboration before the universal implementation. Second, the customers might get dissatisfied with robotic cars due to their specific utilization.
Many drivers are used to operating automobiles with their own hands and do not wish to rely on the technology progress. Therefore, despite the scientific superiority of robotic cars, the IC engine models will most likely still be in high demand shortly.
References
Hill, J. S. (2021). Zoox expects Amazon-backed self-driving car “a lot sooner than people imagine. The Driven. Web.
Morris, J. (2021). Why is Tesla’s full self-driving only level 2 autonomous?Forbes. Web.
Scorgi, A. (2021). Do the math before buying or leasing a car. Toronto Star. Web.