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The Nespresso model has gained followers as far as the automobile industry

The offer: a continual service, a constant quality

We are witnessing a major sectorial evolution in the automobile industry: service today is aggregated to the product, to the point where service and product constitute from now on the two indissociable figures of the automobile object to come.
As proof: The serenity (Renault) or the Full Service Plan (Toyota), the Car Without Worry formula (Axa) or the Auto Lease / Full Service (Dexia) to name just a few.

From the participants point of vue : Fusing skills

The builders now offer financial help and insurance and the insurers-banks add in their contracts maintenance and repair formulas. The financial workers tend to underline the functional benefit of their offer (guaranty of a continued mobility – Dexia) while the builders, who must defuse the worry of uncontrollable expenses, devote themselves to promise good management (“serenely pilot the automobile budget” - Renault)

• Why does the evolution go towards more product-service integration?
• What consequences on the on the professions in the automobile industry?
• What consequences on the relation to the products?

From the client’s point of view : The purchasing logic is dominated by usage

The most synthesized benefit is peace of mind (Incredible Peace-of-mind – Chrysler), idyllic state which corresponds to two expectations: financial tranquility and functional tranquility. This synthesis actually exists in the expectations and is already in the behaviors: we think “product-service”, usage logic rather than purchasing logic, grouping a maximum number of benefits from the start, and the ease of the offer which must be adapted to the changing needs.

Two phenomenon seem to be aware of this evolution :

• As always, the evolution of a sphere of activity, in this case service, is spread little by little on the whole of the areas. However the modern service model, the cell phone one for example, is one of fusion or indifferentiation between the product and the service. The automobile follows simply this basic tendency. • As is often the case (in finance, in computers, etc) the offer initially aimed at professionals, then to fortunate individuals, spreads to the public. It is the case with leasing, which includes a range of financial and technical services.

What must we conclude from this progressive fusion of product and service in the automobile industry?

1) First of all, surrounding the automobile service, the normalization: it is the end of the automobile specificity (“lies like a mechanic”) in the service world. But also, the service industry : product-service fusion implies builder-mechanic, or, failing that, alignment of the service process with norms of the industry which makes the products. We need to present the offer, sell it, and then maintain it in a continuous and homogeneous fashion: the service as well as the product must become reproducible to infinity. The heterogeneity of the service, which we still find in the networks –from the neighborhood mechanic to the window concession of the brand –, does not seem compatible with this evolution. 2) Next, a paradox of a result concerning the nature of the automobile. We could foresee the obliteration of the property in favor of pure usage: we would go from “having a car” to “being mobile”. However leasing, for example, it’s also the means of showcasing a product of lowest cost. Therefore, even though we no longer own a car, it is still crucial to show it off. The product does not disappear in its fusion with service. As the pioneering area of the product-service fusion, the cell phone, this retained object needs to be differentiating, especially with these “packs” which we pay, preferably in monthly installments, the constant renewal is quite irresistible.

François Erner
Contact : Sorgem Tel. 0033 (0) 1 40 67 20 00 | Email : f.erner@sorgemint.com