Considerations for avoiding commoditisation in the automotive industry - analysis of factors that enhance customisation

Abstract

The automotive industry has been achieving profits by creating new value through innovations while the Japanese consumer electronic industry has been suffering from low profitability due to commoditisation. To analyse the factors helping the automotive industry avoid commoditisation, this study focuses on optional parts sales as a means to provide new customer value. It conducts customer surveys to analyse customisation and the effectiveness of directly managed stores' explanations of such value. The results suggest that customers favour customisation, and that directly managed store explanations encourage a performance-oriented customer mind-set, resulting in price increases. Thus, a mechanism is established in the automotive industry where the value created is explained to customers. This mechanism then contributes to price increases. From this, there are implications on ways to avoid commoditisation: 1) create new customer value; 2) enhance customisation to provide new value; 3) establish a value communication mechanism that encourages a performance-oriented mind-set.