Jul 27, 2009
US automakers are in deep trouble. They’ve been overtaken by Japanese automakers like Toyota in terms of size, revenue, profit, and number of vehicles on the road. They are now reliant on government loans and bailouts to stay alive. And one of their CEOs was recently dismissed…..by the President of the United States. There are a variety of factors contributing to the decline of the Detroit big 3, including labor costs, retirement obligations, a deep economic recession, and exploding gas prices. But if we are honest with ourselves, we’ll acknowledge that GM, Ford, and Chrysler have been in a 30-year slide. One important factor to keep in mind is that U.S. automakers lost touch with their customers.
It might be more accurate to say that customer’s themselves changed. In the decade since the Kyoto Protocol, the Big 3 focused on trucks and SUVs as foreign automakers made cars with better fuel economy and lower emissions standards to conform to environmental regulations. Detroit was largely excluded from foreign markets with their most popular vehicles. But the Big Three still held the US market with large trucks and SUVs. Trucks and SUVs were once the rage across the country but have been steadily declining in sales and overall popularity over the past decade. Then gas prices soared and climate change came to the forefront of the American mindset. US automakers were behind on fuel efficiency and technology like hybrid cars and sales for SUVs and trucks plummeted. A decade earlier, misreading the market, they had killed their electric car projects. The Big 3 had completely lost their market share and stood on the verge of bankruptcy.
Geography played a part in the decline of the American automaker. It’s important to note that the Big 3 are all located in Detroit, a city in the Midwest. Despite Detroit itself being an urban area, the Midwest is largely characterized by wide tracks of farmland and open roads. Trucks and SUVs are popular in the area as needed for work and outdoor activities. Thus, designers in Detroit were very well connected with truck and SUV owners and less to city dwellers that needed commuter cars. Geographically, the largest concentration of car buyers is all the way across the country on the west coast. Consumers in Los Angeles and the San Francisco Bay Area need small economical cars that are easier to maneuver and can fit into smaller parking spaces. They found that Japanese and European auto makers met their needs better. On top of that, the design aesthetics of American cars seemed to lag behind. Far away in the Midwest, Detroit small-car designers were not only separated from their customer, but they were also isolated from trendsetting regions on the east and west coast. Their car designs looked out of date, taking cues from foreign cars released years before or gravitating toward retro cues that appealed primarily to older drivers that had their first cars in the 50s.
When designing for distant markets, whether it’s across the US or across the Pacific, it’s important to connect with customers in a target market. Understanding their needs is essential to understanding how to meet them. An interesting case study comes from Toyota, the Japanese automaker that is now leading the industry. Realizing that American baby boomers were getting older and engaging in different lifestyles as their children left home, they sought out help from Palo Alto design firm IDEO to connect with their customers and design a vehicle to meet their needs. IDEO, located in the Bay Area in a busy suburban area with a massive commuter population, conducted ethnographic research to better understand their target users. The end result was the Venza, a stunning vehicle that provides extraordinary value to the consumer with more spacious rear seating to accommodate adults, improved visibility, adaptive highbeams, and a lower step-in height designed to accommodate older drivers.
Another excellent example comes from the mobile phone market. Though located in Finland, Nokia has been able to engage a global market with their cell phones. They did this by studying users in target markets around the world. In fact, Nokia has design arms all over the world including places like Tokyo and San Francisco. In employing this strategy, they’ve recognized the unique needs of users in Japan, Korea, and the US, relative to users in Europe and were able to adjust their product designs accordingly.
Connecting with users in a foreign market can be difficult. Even designing for markets across the United States can be tricky because the cultural differences are real even through they are less obvious. In the end disconnection from a market can be fatal. It’s important when designing for a market in which you are not immersed, to use research and in-person visits to understand your user, how he or she will use your product and how the product can fit into the user’s life.
Understanding the user can be thought of as the most fundamental aspect of design. Even with the most elegant design and perfect engineering, if the product doesn’t provide value to the user, they’ll never use it. In the case of the Big 3 automakers, they lost their connection with their users. As a result, they steadily lost market share until market forces finally crushed them into bankruptcy. It’s not impossible for the Big 3 to make a comeback but it will require rethinking their entire strategy and structure and, hopefully, research and design teams based outside of Detroit. That isn’t to say that the design teams in Detroit aren’t qualified, they did a great job of capturing the truck and SUV market, but designers based in other locations will have an advantage in understanding the needs of local consumers. Only by understanding their consumers can they build automobiles that everyone needs and desires.