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Customer Insights: The Young Generation in China`s Megacities and the Proposals for Value to the Customer from the E-Mobility Business Model

Ge Zhu

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Every vehicle innovation represents the process of human civilization in human history.  In China, private car consumption h...

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Every vehicle innovation represents the process of human civilization in human history.  In China, private car consumption has risen due to the trend towards urbanization and the rising income brought by the booming economy since 2000. However, the Chinese people may have to face a dilemma – “the city after the automobile” –because rarely a day passes without issues, such as energy shortages and traffic jams, in China’s megacities.  Furthermore, the Chinese Government has realized that electric vehicles may offer a once in a lifetime chance to update the value chain in the automobile industry, due to China’s opportunity to become the technology hub for e-components because of its enormous domestic market, the raw material and labor cost advantage, as well as industry police support from the Chinese Government (Roland Berger Strategy Consultants, 2009).  Today, a new business model innovation – the E-Mobility Business Model, which combines electric vehicles and car sharing – is emerging in the automobile industry. Some entrepreneurial carmakers and some of their (new) key partners, such as utilities, battery makers, energy suppliers, telematics service providers, etc., are attempting to offer creative value propositions that include not only traditional products like (electric) vehicles or services like financing, but also a unique customer experience – a seamless urban green mobility concept – that emphasizes smart individual urban mobility without car ownership.   With the trend for private car consumption since 2000, Chinese car owners seem youthful and dynamic. According to SINOTRUST (2011), the average age of a car owner is about 35 years. Thus, carmakers have recognized that if they continue to focus mainly on serving their urban–affluent consumers, they risk missing the real opportunity – China’s young generation. Accordingly, this study defines China’s young generation as the target group. Then, it attempts to profile the proposals for value to the customer from the E-Mobility Business Model – electric vehicles and car sharing – as follows:   • Desired customer value (DCV): This will be uncovered via focus group interviews and statistical hypothesis testing to explore the value propositions of the business model. In  addition, Generation Y tends to prefer private car travel and express sympathy with car sharing. However, considering the social–economic reality, the vast majority of Generation Y members desire “Smart Mobility for Smart Life”, rational individual urban mobility without car ownership, against the background of the advances of mobile Internet and social networks (Feillard, 2010).  • Expected customer value (ECV): This will be determined via maximum difference scaling (MaxDiff) to identify and plan the key activities of the business model. Generation Y seems pragmatic because this study has uncovered the consumer preference of Generation Y for functional customer value among emotional customer value, economic customer value, and functional customer value. Hence, for China’s young generation, the dream e-car seems to be reliable/safe, user-friendly, and cost saving.  • Perceived customer value (PCV): This will be disclosed via conjoint analysis to classify the customers of the business model based on customer preferences for the concrete attributes of electric vehicles in terms of model, price, mileage, charge, and brand. Accordingly, Generation Y emphasizes basics such as the model, brand, or high-tech appeal, but only at the right price.   As a result, the value offered to China’s young generation by electric vehicles and car sharing, originating from the Customer Value Hierarchy Model (CVHM), can be profiled. Following this, the study segments China’s young generation via factor analysis, cluster analysis, discriminant analysis, and cluster*attitude crosstabulation. As a result, the Generation Y clusters – showing differences in social–demographic profile, consumer mental characteristics, and attitude to e-mobility – may be identified. The cost saver – “Economist” – could be defined as the early adopter of e-cars and the fashion follower and the “Activity Faddist” could be defined as the early participant in car sharing, respectively.  In addition, this study transforms the value to the customer resulting from e-mobility and the customer segment into the E-Mobility Business Model. First, the background of the E-Mobility Business Model – electrifying vehicles and communication instead mobility – will be introduced.  Then, car sharing – an emerging business model in the automobile industry – will be presented via a business model canvas. Furthermore, this study attempts to blend the business model canvas with the blue ocean strategy. For good reason, a visual “big picture” can be profiled to help people understand how changing one part of a business impacts on other components (Osterwalder & Pigneur, 2010). Moreover, this study evaluates the business model via a SWOT analysis. Consequently, the payment reserves of the customer, infrastructure, degree of technology maturity of the e-car, and premium of the e-car can be recognized as the key factors in the marketing e-mobility concept (Olschewski, 2011).   Furthermore, this study creates a positioning for e-mobility, “Smart Mobility for Smart Life,” via business innovation radar. The spirit of this positioning is to create a networking – a fleet or integrated city mobility mode – to meet the customer’s individual mobility needs in an efficient process – pick up/drop off anywhere via an official website, official shop, or smartphone apps. As a result, a seamless green urban mobile customer experience can be generated.  To conclude, the advance of the battery on a mass scale could be recognized as the key factor to marketing electric vehicles. However, only the advanced E-Mobility Business Model can determinate whether electric vehicles and car sharing could really realize “Mobility, the ancient yet vigorous dream of human (Chen, W., 2002)”.