This "Autonomous Vehicles: Smooth or Bumpy Ride Ahead?" case study focuses on the emergence of driverless cars or AVs. It seeks to look into the industry that would be greatly impacted by the introduction of this new technology. The case study discusses the factors interplaying in the industry and the role of each player.
Elie Ofek and Akhil Waghmare
Harvard Business Review (520008-PDF-ENG)
July 01, 2019
Case questions answered:
- Choose one industry you believe Autonomous Vehicles (AVs) might impact heavily, and answer the following questions:
(a) With what we have discussed about market segments, what is/are the potential segment(s) for that industry?
(b) Which of the segments are attractive target segments, and explain why they are attractive?
(c) Explain the value proposition for the segment(s) you have identified, and if it differs across segments, explain why.
(d) For one of the segments you have defined, write a positioning statement for that industry segment (refer to Lecture 4, p.92). Present ways the marketing mix can be designed to differentiate the company in that segment and explain how it supports the positioning statement.
- Review the levels of autonomy in autonomous vehicles (AVs L1-L5) discussed in the case. Based on the facts in the case,
(a) What would you advise an AV manufacturer as the ideal new product development strategy to get their product to market: “baby steps” (release cars that are L3, learn and evolve) or “big step” (target L5 initially)?
(b) Describe why you would make that recommendation.
(c) Describe both the benefits and risks of either approach.
- Consider the following three target market scenarios … i) Selling to “end consumers” (B2C), ii) Selling to the “delivery” industry (B2B) (i.e., long haul commercial trucking), and iii) Delivering to the “ride-hailing” industry (e.g., Uber). Use the information provided in the case to support your analysis. For each of the three target markets above, answer the following:
a) What is the stage of the adoption lifecycle, and what does it mean for AV adoption by the target market?
b) Describe what are the potential facilitators of AV adoption in each of the markets.
c) Describe the potential barriers to adoption in each of the segments. and what can be done by the company to overcome these barriers.
- The success of AV adoption in the market will be influenced by its business environment.
(a) What role do you expect the government will play in making AVs a reality?
(b) Describe what government actions can facilitate market adoption.
(c) Describe how government actions can create barriers to market adoption.
(d) What kind of regulations do you expect the government will pass?
- Using the information provided in the case, answer the following:
(a) What is your forecast for the penetration of AVs in the United States market?
(b) What percent of all vehicles sold will Autonomous Vehicles represent 3 years from now, 5 years from now, and 10 years from now? Provide support for how you arrived at your assessment.
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Autonomous Vehicles: Smooth or Bumpy Ride Ahead? Case Answers
1. Choose one industry you believe Autonomous Vehicles (AVs) might impact heavily and answer the following questions. (a) With what we have discussed about market segments, what is/are the potential segment(s) for that industry? (b) Which of the segments are attractive target segments, and explain why they are attractive? (c) Explain the value proposition for the segment(s) you have identified, and if it differs across segments, explain why. (d) For one of the segments you have defined, write a positioning statement for that industry segment (refer to Lecture 4, p.92). Present ways the marketing mix can be designed to differentiate the company in that segment and explain how it supports the positioning statement.
The Autonomous Vehicles industry, including vehicle sales and potential infrastructure, is estimated to be between $30 billion and $550 trillion by mid-2020, with some experts estimating that AV transactions could exceed 33 million by 2040.
The estimate of benchmark sales provided by industry analysts was highly unpredictable and focused on numerous variables, including product design, legislation, technical costs, and customer acceptance.
The said industry would impact numerous industries such as Transportation Network Companies (TNCs)/ride-hailing companies, sensors manufacturing companies, the Insurance market, data companies, logistics, and car manufacturing companies. The most impacted industry would be car manufacturing firms.
A) POTENTIAL INDUSTRY SEGMENTATION:
The U.S. market is the second-largest automobile market in the world. Due to the increase in the number of accidents, car manufacturers constantly changed the design and improved the safety of the vehicle. The designs include more safety features and the generation of light vehicles.
However, light vehicle sales seem to be flattened in recent years. The new light vehicle sale in the US was 17.2 million, and used vehicle sales were 40.4 million in 2018. This data leads to specifying the buying behavior of consumers. The buying shift is based on the design or technology of the car.
Thus, it leads the two potential market segments for the car manufacturing industries based on the common factors such as technology used and product design to meet the consumer demand.
Market segmentation through powertrain design:
The automobile manufacturers sell cars equipped with different powertrain model technologies tailored to satisfy customer demand.
Semi-Autonomous vehicle: This has autonomy up to Level 3, i.e., Level 3 vehicles have capabilities for “environmental detection” and can make informed decisions on their own, such as speeding past a slow-moving car. But they still need the override of humans. If the system is unable to perform the task, the driver must remain alert and ready to take control.
Fully Autonomous vehicle: This has the autonomy of levels 4 and 5. Such cars are fully automated and don’t require human intervention.
Along with the autonomous factor, the design has a powertrain factor: The powertrain factor is an internal combustion engine (ICE). A small number of new research projects utilize ICE automobiles refitted with the correct sensors since they are the most readily accessible cars on the market. The future Autonomous Vehicles are more likely to be electric because of the ability to communicate more effectively with onboard computers and have fewer moving components (as opposed to ICE powertrains), contributing to improved efficiency.
Market segmentation through technology:
This segmentation for the car manufacturers consists of three efficient technologies that have a high impact on the cost of an autonomous vehicle.
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