Automobile Parts and Equipment

Challenges for the industry

After years of cost cutting in the automobile industry that put parts suppliers under incredible price pressure, a phase of re-evaluation is in progress. New structures are being formed, in which parts suppliers and manufacturers collaborate in their efforts to satisfy customer demands as effectively as possible. More and more technical developments are being taken over by the suppliers; at the core is the concept of the "system supplier".

In order to achieve success in the future as a "system supplier," it will no longer be enough to satisfy the demands of the direct customer, the automobile industry. Products will have to be aligned with the demands of the end customer. In the future, the only company that will survive will be the one that gears its strategy to the entire remainder of the distribution chain.

Solutions through Consulting Services

In order to operate successfully in the market in the future, the concept of end-customer value plays an ever larger role. The successful supplier must be able to answer the following essential questions:

Solutions through Consulting Services

The right marketing decisions must be made in order to operate successfully in this highly competitive market. Perceived customer value plays an even greater role here leading to many important questions. Some of the key issues to consider will be:

• From the customer's perspective, what are the deciding factors in choosing a vehicle? Is my product in any way affected?
• Does my product have an impact on value to customer? If yes, how great is the impact?
• Where (product, services, sales methods) should improvements or product developments be applied in order to increase the value to end customers as effectively as possible?
• How great is the end customers' willingness-to-pay for these improvements / product developments? How can a win-win situation for both supplier and auto manufacturer be created?
• Which target costs can be derived from this willingness-to-pay for product developments? How can customer preferences be incorporated into technical products (Quality Function Deployment)?
• What is the optimal price positioning for my product in view of the objectives being pursued (profit and/or sales volume)?
• Can a brand premium be obtained for my product from the end customer? How high is it? How much of a premium can I demand from the automobile manufacturer?
• Can my product be turned into a brand product in the eyes of the end customer? If so, is it more difficult to replace me as supplier?
• What volume does the automobile manufacturer gain or lose by installing or not installing my product? Are our strategies affected by the introduction of the euro?
• If so, what is the optimal euro / international price strategy? Do we need a price corridor? If so, what is the ideal price level and corridor width?
• Do we have the right rebate system?

Consulting services (approach)

In order to be able to meet the demands of the automotive market, Simon-Kucher & Partners founded the Competence Center Automotive in 2000. In numerous projects for automobile parts suppliers, we have answered the questions above, made recommendations, and thus created the decision support principles for collaborative problem-solving by automobile parts suppliers and manufacturers. The "value" element is very difficult to get a handle on with traditional marketing tools.

Our far-reaching, long experience in the automotive industry has provided us with the know-how needed to develop specially customized analysis tools. We use proven techniques of indirect questioning such as Conjoint Measurement (ACA, CBC, CVA) and decision support systems designed for each specific problem. The latter are made available to the client on request as permanent marketing tools. For the purpose of incorporating customer preferences into technical products, we implement tools like Quality Function Deployment (QFD).

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