Customizable cars - a transitory hype or the future of the automobile industry? A study of customization in the automobile markets of China, India and the United States

Examensarbete för masterexamen
Master Thesis
Management and economics of innovation (MPMEI), MSc
Frick, Amanda
Wenklo, Ludwig
Customization is a growing trend in several markets, ranging from a few customizable options to bespoke offerings where products are tailored completely according to the customer’s taste. The Company (anonymized) on which this study is applied, a large automobile manufacturer in Sweden, are noticing the trend of customization in the automobile as well as in many other markets, and have requested an investigation of whether they too should implement such an offering. The Company believe that an extended customization offering (that is, an increased level of customizability compared to the limited options of for example exterior colors usually available in standard car offerings of today) rather than complete bespoke will be the best fit given their price range and brand image, and that such an offering will strengthen their brand. For these reasons, this study investigates possible demand for an extended customization offering along with the customer values that should be delivered, as well as whether the offering will in fact strengthen the Company brand. A pre-study has identified China, India and the United States as promising markets, hence this study is limited to the markets of these countries. This study addresses the research questions by exploring three different perspectives; the customer, the supplier, and the branding perspective. The customer perspective includes interviews and questionnaires with general potential customers as well as experts on the luxury car markets of the three addressed countries, with the aim of verifying demand for an extended customization offering. The supplier perspective in turn uses secondary industry data to assess the prevalence of customization offerings already being offered in both the automobile as well as other markets; luxury yachts, luxury watches and retail. Finally, the branding perspective compares the values offered by an extended customization offering to the Company’s intended brand repositioning to determine if the offering strengthens the brand. To assess the values delivered by the offering and the values prioritized by the customer groups, this study uses the customer perceived value tool (CPVT) which defines the utility, uniqueness, self-expressiveness, hedonic and creative achievement values. Further, theory on luxury goods, national cultures and branding strategies are used. This study finds that an extended customization offering has weak support from the customer perspective, that is, there is little identified customer demand. There is however support from the supplier perspective, as customization offerings in varying degrees are increasingly offered by actors in a broad range of industries. Finally, from the branding perspective, this study finds that the values of an extended customization offering do not align with the Company intended brand repositioning. That is, an extended customization offering is not deemed to contribute to a strengthened Company brand. Combining all three perspectives, an extended customization offering has inconclusive support and is not deemed to strengthen brand image. That is, the findings of this research suggest extended customization of cars is likely a trend among suppliers and not necessarily the future of the automobile industry.
Innovation och entreprenörskap (nyttiggörande) , Övrig annan teknik , Innovation & Entrepreneurship , Other Engineering and Technologies not elsewhere specified
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