New Luxury: How Italian Car Brands Are Redefining Excellence to Meet Modern Demands
Executive Summary:
In an era where the definition of luxury is rapidly evolving, luxury automotive manufacturers face the challenge of redefining their approach to meet shifting customer expectations. This transformation necessitates a deeper understanding of customer requirements at the early stages of product development. This study focusing on Italian luxury automotive brands offers insights into how these companies are navigating this changing landscape. Our take on it is that by prioritizing perceived quality and employing strategic communication, luxury car makers can align their offerings with modern consumers' desires, ensuring their position in the competitive market.
Key Takeaways:
Customer-Centric Product Development: Engaging with customers early in the design process is vital for accurately capturing and integrating their requirements.
The Shifting Definition of Luxury: Today's luxury car buyers expect a blend of traditional luxury attributes and the high functionality and quality typical of premium segment cars.
Benchmarking Beyond Direct Competitors: Luxury vehicle manufacturers are now comparing their products not just with those of direct competitors but also with premium segment vehicles to meet customer expectations.
The Importance of Perceived Quality: Emphasizing perceived quality in the design and development stages can lead luxury cars to fulfill and exceed customer expectations.
Innovative Communication Strategies: Direct and personalized communication with customers helps luxury brands understand and meet their unique preferences.
What's the case?
In the past ten years, the luxury market has experienced significant growth, with luxury automotive brands playing a pivotal role. To maintain competitiveness and meet rising consumer expectations, these brands must prioritize understanding and integrating customer requirements from the very start of the product development journey.
A requirement is essentially a specification that a product should meet, encompassing desired properties or functionalities articulated either consciously or unconsciously by stakeholders. Historically, luxury automotive brands have adopted a customer-focused approach to product development, a practice that becomes even more crucial as the definition of luxury evolves rapidly.
The concept of luxury, traditionally associated with exclusivity, aesthetic design, and rich heritage, has broadened to include high-quality manufacturing. Previously, the allure of luxury vehicles was primarily emotional, driven by the brand's prestige rather than the product's quality. However, the trend has shifted towards involving customers directly in the creation of value, with perceived quality now a critical factor in purchasing decisions within the premium automotive sector.
This study uncovers evidence that:
Luxury vehicle customers are now actively involved in defining requirements, expecting a level of perceived quality comparable to that of the premium segment.
Luxury automakers are benchmarking their products not only against their direct competitors but also against the premium segment.
Our findings indicate that luxury car manufacturers face challenges in communication and accurately defining customer requirements due to gaps between designers, engineers, and customers. This leads to misunderstandings about important quality attributes.
We suggest adopting the Perceived Quality Framework and a detailed requirement engineering process to accurately capture and document customer needs early on, avoiding costly changes and ensuring product alignment with customer expectations.
By focusing on quality and customer engagement, luxury automakers can navigate past the pitfalls common in the premium segment and better meet the evolving demands of luxury consumers.
Research Design
We conducted interviews with professionals from Italian luxury vehicle manufacturers to gain comprehensive insights into their methods for defining customer requirements and addressing perceived quality issues. Our goals included understanding how perceived quality attributes are identified and communicated across the company departments.
Each interview, conducted in English and lasting approximately 60 minutes, was voice recorded and then transcribed for analysis using NVivo software. Two researchers independently analyzed the data, achieving a Cohen’s Kappa inter-coder agreement indicative of good consensus on the findings.
The interviews aimed to explore opinions on defining customer requirements, perceived quality, communication strategies, and the identification and importance of specific perceived quality attributes. Initial questions were broad, focusing on the concept of perceived quality from a designer's perspective, which then narrowed down to specifics like which attributes affect visual quality and exterior design preferences.
Data analysis organized the findings into several key areas: perceived quality, competitors, manufacturing processes, perceived quality attributes, shifts to premium, requirements definition, and communication strategies. This bottom-up approach allowed us to pinpoint emerging trends in quality perception and communication within the luxury automotive sector, providing valuable insights into the industry's evolving landscape.
Findings
The interviews with professionals from Italian luxury automotive companies unveiled several noteworthy trends.
One significant insight is the emerging focus on perceived quality—a concept both companies are beginning to prioritize alongside their traditional methods of understanding and meeting customer needs. Despite their history of successfully translating individual customer preferences into technical specifications, these luxury brands are navigating new waters. Yet, they maintain certain "iconic" features that define their brand identity, undisturbed by changing trends.
Interestingly, luxury vehicle manufacturers are increasingly comparing their offerings not just with direct competitors but also with premium segment vehicles. This shift arises from customer feedback indicating that luxury cars sometimes lack features and functionalities expected by those accustomed to premium segment vehicles. As a result, leading luxury car makers are now benchmarking against both their traditional competitors and premium brands to ensure their vehicles meet or exceed these heightened expectations.
In essence, as the luxury automotive industry evolves, brands are not only preserving their unique, iconic features but also venturing into new territories like perceived quality and broader benchmarking practices. This dual approach aims to satisfy long-standing customers while adapting to the broader expectations of today's luxury car buyers, ensuring that luxury vehicles remain synonymous with both tradition and innovation.
Conclusions
There is an obvious effort within the luxury automotive industry to refine methods of capturing and translating customer preferences into product designs that resonate on both an emotional and practical level. By benchmarking against not only direct competitors but also premium brands, luxury car manufacturers are expanding their perspective on quality and customer satisfaction. This strategic approach not only addresses the risk of customer complaints regarding missing features but also positions luxury brands to better anticipate and fulfill the evolving desires of their clientele.
Disclaimer: This Future Insight is the adaptation of the original research article entitled: “The Communication Strategies and Customer's Requirements Definition at the Early Design Stages: An Empirical Study on Italian Luxury Automotive Brands." Written by Kostas Stylidis, Monica Rossi, Casper Wickman and Rikard Söderberg. Originally published by Elsevier in Procedia CIRP.
About this paper:
Stylidis, K., Rossi, M., Wickman, C., & Söderberg, R. (2016). The communication strategies and customer's requirements definition at the early design stages: an empirical study on Italian luxury automotive brands. Procedia CIRP, 50, 553-558. https://doi.org/10.1016/j.procir.2016.04.062