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European Customer Desirability and Willingness to Pay for Infotainment Features
Frost & Sullivan, April 2005
Improving Consumer Awareness is Key to Increasing Uptake of Infotainment Systems
Although the European infotainment industry is expected to generate €6.20 billion by 2010, there exists a lack of sufficient awareness among consumers regarding infotainment at present. Around 61.0 per cent of those sampled in the Frost & Sullivan study had not heard of the term infotainment, indicating the failure of original equipment manufacturers (OEMs) and suppliers in raising end-user awareness. Importantly, while the D&E and multi-purpose vehicles(MPV) segments attached maximum importance to infotainment at 21.0 per cent, the crucial mass market vehicle segments recorded least influence, highlighting the urgent requirement for increasing the influence and importance of vehicular infotainment features.
This Frost & Sullivan research service evaluates the European consumers desirability and willingness to pay for vehicular infotainment features. The conjoint analysis methodology used in this study brings out the most appealing and optimal package for infotainment and includes different applications, features and pricing across countries and vehicle segments. This is likely to help OEMs and suppliers formulate effective product and pricing strategies.
Basic Audio Systems Remain the most Preferred Infotainment Application
The basic audio system with AM/FM, digital radio and a 6 CD changer, remains the most preferred infotainment solution among European drivers. While navigation and control devices form the next two choices, the preference for multimedia systems was the least and these systems were referred to as niche and only seemed to be popular in MPV and higher vehicle segments. Also, with most consumers wanting to use their own mobile phones and 68.0 per cent desiring fixed in-vehicle solution for navigation, audio and multimedia, there exists a need for integrated solutions such as black box technology.
Across Europe car dealerships are clearly the leading channel for purchasing infotainment features. However, the Internet also registered a significant presence and was particularly more prominent in the UK and Germany where 21.0 per cent of respondents opted for this purchase channel. Respondents clearly understood that navigation, audio and rear seat entertainment systems formed ‘infotainment and phone systems and SOS buttons were thought of as additional features, says the analyst of this research service. Interestingly only half of respondents considered phone systems as part of the infotainment system and hence manufacturers could consider ‘marketing’ these features separately.
Pricing remains a Barrier to Penetrating the Mass Market Vehicle Segment
In using the conjoint analysis to estimate the consumers perceived pricing for individual infotainment solutions as well as infotainment packages, the study found that the average perceived price for a complete infotainment system was €1540, while the consumers were only prepared to pay up to €1240. This difference in the customers willingness to pay is proving a major barrier in penetrating the mass market vehicle segment that holds tremendous revenue and return on investment (ROI) potential. Hence, with customers not willing to pay for features they do not use or value, system manufacturers and service providers need to tailor the prices and relevance of their offerings to suit the consumers expectation.
As over 50.0 per cent of consumers in France, Germany Spain and the UK are expected to equip their next vehicle with navigation systems, market penetration for such systems could rise dramatically over the next few years. Also, while 40.0 per cent of the people prefer to wait until their next purchase to have a telephone car kit, one-fourth of the respondents said they would prefer a new system for their current vehicle indicating a potential marketing opportunity. Vehicle manufacturers must stop looking at Infotainment as an automotive product and look at it from consumer electronics product perspective, says the analyst. With the need for improved consumer awareness, OEM’s need to increase their marketing efforts to drive home the benefits of infotainment systems and the Internet could prove an effective medium.
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