Automotive Market Research Trends in Korea

By Yong Duk Kim at Global Research Department of Hankook Research, Korea


Current Automotive Market in Korea

The world is suffering from an economic crisis. In particular, America’s Automotive Big 3 – GM, Ford, and Chrysler – and Japan’s Toyota are undergoing major organizational restructuring due to a diminishing revenue stream. In addition, poor sales, which are occurring worldwide, have resulted in a significant decrease in vehicle production. Japanese automakers reported that the decrease in car production was far larger in December (2.87M) than in November (1.9M). Within a time span of just one month, vehicle production has dropped by 1 million units. It appears that the automotive industry is suffering far greater than most other industries.

Korea’s automotive industry is no exception to this worldwide economic slowdown. In 2002, Korea’s domestic automobile market reached its peak. Since that time, it has been on a slippery downhill slope. This year, the market is sliding yet farther. In recent years, Korean automobile manufacturers have steadily increased their exports. Exports peaked at 2.9 million units recently. However, exports to Europe, China, and the US are expected to decrease. All Korean automobile manufacturers are under an immense amount of pressure. In addition, the domestic market is getting more and more competitive and all automobile manufacturers are offering price discounts and complimentary options – all in an effort to boost sales.

In Korea, the automotive industry occupies a significant portion of the entire economy. Accordingly, market research related to the automotive industry is considered very significant. However, due to last year’s economic crisis, some HRC clients postponed research projects for new car development and new car launching strategies. However, market research projects will play a critical role in the future success of a company. The worse the market gets, the more a company must strive to understand consumers’ needs/desires, analyze the competition, and diagnose its products and brand power by executing well-designed research projects. This will enable the company to launch an effective plan of action that will help the company survive and grow.

Unique Features of Automotive Market Research

We oftentimes think to ourselves or overhear someone say, “the owner of that car must be rich and smart. He probably leads an active and fun lifestyle. That car is perfect for professionals or businessmen in their 30’s.”

Why do we make snap judgments about the owner simply by looking at his/her car? The reason for this is that cars have become closely associated with our lifestyles, value system, social/financial status, and personal tastes. Cars reflect as much about ourselves as the clothes we wear, the houses we live in, and the personal items we carry. It is a medium by which other people get to know us. For this reason, compared to consumer goods, research for cars requires diverse methodologies and complicated procedures – i.e. lifestyles, value system, meaning of car (what consumers think, how they live, and what a car means to them), U&A, personal car tastes, satisfaction/dissatisfaction with their current car, needs/unmet needs, product competitiveness (design/performance), price, name, advertising campaigns.

Among these various research projects, those dealing with the generation of ideal concepts for a new car are the most important. In order to stimulate consumer spending and overcome this current economic crisis, cars must be developed that truly fulfill and satisfy the needs and desires of consumers.

Methodology for Developing New Car Concepts

Before undertaking such a research study, the following must be determined ahead of time:

1. Size and characteristics of each market segment à Accomplished using a market segmentation study

2. Whether or not this project is limited to certain segments

3. Whether or not this project is designed for developing a successor to a certain type (e.g. SUV) of a car

You must clarify whether this project targets certain consumers and certain car types or aims to gain an understanding of certain consumers’ latent needs in order to generate concepts for a new car.

Once the target segment is set, the project will be completed in 5 stages.

1st stage: Web Diary & Ethnography & Peer Shadowing

  1. Gain an understanding of participants’ car U&A and unmet needs by asking participants to create a Web Diary for one week.
  2. Rent a specific model for participants for 2 weeks and study their reactions to the car – U&A and unmet needs.
  3. Conduct a Personal Interview with the participants’ family members at their home (Home Visiting) because some consumers base their decision on car buying solely on their lifestyles, personal tastes, and value system.
  4. Ask participants to upload images of anything they like/dislike and write a journal about why they feel this way (Photo Diary). This enables us to figure out their personal tastes. In addition, the Image Word Sorting Method allows us to identify participants’ tastes using specific words/images. This enables us to gain an understanding of participants’ unmet needs.

The goal of this stage is to gain an in-depth understanding of target consumers’ lifestyles, value systems, U&A, characteristics, tastes, and needs/desires.

2nd stage: FGD – Concept Generation

  1. Ideal Image Sketch. Using the findings from the 1st stage, group participants together by their shared desires. Generate each group’s ideal image sketch.
  2. Ideal Feature. Create a set of USPs and features that match the ideal images drawn in step 1.
  3. Personification. Personify each candidate of the ideal designs and features. Develop each candidate’s images and dontevaluate them.
  4. FMB (Fill-in-the-Blank Method). Develop each candidate. Determine and explore the key factors that are required to develop a new product.

3rd Stage: Creative Work Shop

  1. Clients – marketer, designer, and engineer – HRC researchers gather to discuss each candidate’s strengths and probability of concept actualization. Select candidates for which market acceptability will be surveyed.
  2. Develop the selected candidates. Create boards/PPT slides that contain words/images of the developed candidates.

4th Stage: FGD – Market Acceptability

  1. Forced Idea Gathering Technique is used during this stage.
  2. Organize each concept candidate by the following categories – sketches, standard features, optional features, images, image words, and name candidates. Create a board for each category.
  3. Ask participants to take note of the first image they associate with the entire concept or a portion of it. Probe deeply into their reasoning in order to understand the acceptability of each candidate.
  4. Generate improvement/appealing points for each candidate.

5th Stage: Gang Survey – Market Acceptability

  1. Select a concept finalist via a quantitative survey.
  2. Probe deeply into what appeals most about the concept finalist.

The final concept, selected through the aforementioned 5 stages, will be compared to competing models. Its product competitiveness will be tested using “renderings,” “mock-ups,” and a “finished vehicle.” This will provide insight that will aid greatly in properly executing optimal market positioning.

A new car concept development study typically lasts an average of 6 months. I believe this kind of project is the pinnacle of market research because it requires all methodologies currently available. In the past, these various methodologies were applied only to electronics, portable devices, food, and living products. However, HRC’s Creative Team is now putting these methods to everyday use when examining the automotive industry.

We continue to do experiments in order to discover more optimal, innovative, and effective methodologies. If I come upon research methodologies that prove more effective and/or fruitful, I’d like the opportunity to present them to you in the future.