A major manufacturer of utility vehicles used by municipalities throughout North America was at a crossroads. With an industry increasingly focused on green alternatives, its recently appointed CEO knew that the company had to innovate to remain competitive.
Prior to the CEO’s arrival, the company had invested in design development of an electric vehicle in a bid to address the industry changes. However, it hadn’t done any market research prior to development, a surprisingly common scenario despite the inherent risk of developing a product consumers don’t actually want.
In preparation for its manufacture, the company asked kisquared to do a commercial viability study for the proposed vehicle.
WHAT WE DID
After a number of consultation sessions with key individuals at the company, kisquared designed a comprehensive research study and extensive questionnaire targeting three market segments:
- The company’s loyal customers (those who had purchased a vehicle in the last 5 years)
- The company’s inactive customers (those who had purchased a vehicle but not in the past five years)
- The company’s potential, untapped customers (those who had purchased similar vehicles from other companies)
Initially, the company wanted to limit its market analysis to its own customers. Although this is a common approach, it’s a risky one because it limits the view of the entire market and can lead to critical flawed assumptions. The company agreed to expand the research to include potential customers, which kisquared helped the company identify. In new product research, companies are understandably concerned about revealing that they have a product in development. We address this concern by carrying out a brand-blind study meaning that the company’s name is not revealed to study participants.
As part of its analysis, kisquared examined the following:
Market Profile – The composition of customers for this class of vehicle and what brands they are purchasing currently.
Vehicle Requirements – The features necessary to meet customer needs.
New Product Positioning – An examination of buying intentions based on price point and specific product features.
WHAT WE FOUND
Our detailed market analysis revealed that the company had made a number of false assumptions about the design and marketing of its new electric vehicle. The assumption that municipalities were changing vehicle procurement practices based on environmental sustainability requirements was correct. However, what hadn’t been considered was the increasing use of alternative modes of transportation by municipal workers such as walking and cycling coupled with the adoption of new technologies. In some cases, these technologies radically altered how workers performed certain job tasks, but hadn’t been considered in the design of the new vehicle. Without asking the right questions along with examining the entire potential market, these crucial marketing factors would have been missed.
Also, many of the assumptions the engineers of the new vehicle made about specific features did not mesh with the requirements customers said were critical to their decision to purchase. These features related to the amount of time for the vehicle to re-charge, its turning radius and required power to ascend steep grades.
Based on the study results, kisquared was able to provide guidance with respect to price point, design requirements and branding. Interestingly, the company had been under the impression from its vehicle dealers that a lower price point was necessary to secure sales. Results from the study of end customers however, revealed much less price sensitivity. An overreliance on feedback from dealers, who have a narrow sales-driven perspective, often leads to a skewed perception of the reality if not confirmed with the end customer. In this case, it could have left money on the table by setting a lower price point.
As a result of our analysis and recommendations, the manufacturer changed the vehicle design to incorporate the features required for municipal workers to carry out their jobs most efficiently and safely.
The company developed relationships with the manufacturers of the other technologies municipal workers were using and planned to include these tools in the vehicle’s dashboard and overall design. This improved the marketability of the vehicle and its ability to compete with other forms of transportation.
The study results also enabled us to specify ways the company could brand the new vehicle to appeal to the procurement trend towards environmentally sustainable, economical equipment.