Development of a Predictive Demand Curve Model for Top Automotive Brand's New Crossover EV
When our client wanted to bring a new Electric Vehicle to the mass consumer market in the US, they needed to develop a pricing and leasing model that would make their new vehicle accessible and attractive to the widest possible market. With the EV market rapidly expanding and maturing, novelty was no longer a competitive advantage.
With the launch of the first mass-market Crossover Electric SUV coming, our client needed to determine how best to present a range of possible add-on features, including unlimited charging, roadside assistance, and more. Moreover, market demand for EVs had not yet formed a predictable and demonstrable pricing structure, in large part because the economics of an electric vehicle are fundamentally different from those of a gas-powered vehicle. Total lifetime ownership costs and retained value introduce several complicating variables that consumers do not always have front-of-mind when thinking about a vehicle purchase.
Our history and experience with this client and others in the automotive sphere allowed us to formulate a comprehensive research strategy to help them determine: which features to include in a leasing package; how best to describe and present those features; what pricing structures would work best to attract the largest market; and how best to stagger various add-ons to increase interest and uptake of the leasing product.
We began with a series of qualitative research studies aimed at determining whether or not customers in the market for an EV (both current, and prospects) interpreted various features in similar ways. "Unlimited Charging" might have, for example, certain expectations built into the phrase, and we wanted to determine the degree to which we needed to provide clarification about this and other terms before diving into larger scale research.
Qualitative feedback also helped the EV Launch team understand how better to present individual features, and how and when feature preferences seemed to "cluster" around specific EV Personas.
At this point, we worked with the team to develop a set of twenty five feature descriptions, to be used in a large-scale quantitative survey. With several thousand participants drawn from across a representative sample of potential purchasers, we were able to gain statistically-significant insights into how clusters of features tended to form, with a specific understanding of how demographic and psychographic attributes of the audience affected that clustering.
Finally, through a series of recursive choice order ranking exercises and other related survey techniques, we were able to determine how specific lease features, and combinations of those features, affected price-sensitivity among our survey participants. The resulting demand curves allowed our client to better understand how to package each vehicle trim package with additional options - and where to make those options available as add-ons with stand-alone pricing available.
With a price demand curve and market-driven leasing packages in had, our automotive client was fully prepared to go to market with their new EV launch. Working closely with the product team developing pre-order and reservation management features to prospective customers, we helped to integrate these leasing options into an online order management system (for which we also provided design, usability, and validation testing.) Although EV sales demand far exceeds supply in the current market, our client was able to differentiate their product in a field increasingly filled with follow-on offerings that appeal to a wide range of customers. Targeting specific customer personas with leasing packages that are attuned to their unique needs and considerations has led to a 10% increase in vehicle sales over the last 12 months.
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