Why DriveNow is steering in the wrong direction

DriveNow is, at least from a customer feedback point of view, a highly successful car-sharing program in Germany, initiated by BMW. In Berlin, where I live, its incredible how often you come across the DriveNow branded Mini's in traffic. I'm a big fan of the program even though I use it only 3 to 4 times a months. But those times I'm totally satisfied with the user-experience, the state of the cars available, the close availability of the cars in general and the fact that these Mini's and the occasional BMW 1 Series and X1's are just great fun to drive. They also tick all the boxes when it comes to the combined use of Mobile Apps to find and book the cars and the website to inform (and also find and book the cars). All was fine at 29 ct/s min. to drive these cars until the moment an email dropped in my private mailbox...


First things first; what is DriveNow?
Not all my readers live in Germany so here is what DriveNow is about. DriveNow is a car-sharing program introduced by BMW and rolled out in Germany and in San Francisco. In Germany it competes with offerings owned by Mercedes (Car2Go), Volkswagen (Quicar, only in Hannover) and Deutsche Bahn (Flinkster). What's great about these Programs is - apart from Flinkster - that you can find and park the car anywhere in e.g. Berlin in the streets. You're not bound to pick-up and return at fixed stations in the city. Parking is for free, even in zones where parking is normally charged. Astonishing enough the cars are invariably in a clean and scratch-free state. You find and book cars using a mobile app or a website. You open and close the cars with a NFR chip that's attached onto your driver's license.
The business model is very easy. You pay 29 Euro cts. / minute once you've started a booking and are driving the car. If you want to keep it for further use you pay 10 cts. / Minute parking fee.
For a one-off fee of 29 EUR you join the program and the rest of your costs are variable.
So far so good.

I want to pay for how often I HAVE used the service, not on how many times I PLAN to use it! 

K.I.S.S. Convenience Goodbye
Then I got an email announcing a new tariffs. When I read it at first I thought it was all ok. They just announced the availability of pre-paid minute bundles. Buying more minutes gets you a lower charge / minute. Then I saw that they increased the tariff per minute from 29 to 34 cts/minute. And then it dawned on my. This pre-paid payment model is totally wrong.

Dear DriveNow, your program is all about utter convenience. The fact that I can pick up and leave a car anywhere I want within the dedicated zone, without being bothered about parking fees or fuel is fantastic. Now don't ask me to plan the usage of your program ahead. I know I will be on the loosing streak when I don't consume the minutes in one month that I thought I'd need.

In fact its no longer in line with how the internet works. I expect to use you're offering on a very simple basis. I want to pay for how often I HAVE used the service, not on how many times I PLAN to use it! For god's sake in today's world I wouldn't know how to plan that and actually I don't want to. Discount based on Use-Frequency is so easy to achieve and above all so fair!

So my suggestion is that DriveNow respects the Keep It Super Simple or K.I.S.S. approach which they applied at the start.

Pay-per-use
So DriveNow should really offer me an automatically increasing discount when I use the  program more frequently. I should feel rewarded for using the program. That is e.g. also the case through the "fill up the tank and earn 20 free minutes" deal. That is how I want to use DriveNow. I provide a value by filling up the tank and get a more than generous 20 minutes in return. "I Like"!

This new pre-paid package feels all wrong and reminds me too much of the old subscription economy, so much loved by the telecom operators. They spend tons of money on explaining packages with all sorts of limits and benefits which in the end still come across as a swindle.

Selling services in today's internet economy should not be about selling 'old-school subscriptions but a "pay-per-use frequency" model. DriveNow has the opportunity to apply this in the real world. I would even go as far as accepting an increase of the fee for infrequent use to 50cts/minute. As long as it rapidly declines when I use it more often.

Anyway, thanks for reading my blog. Feel free to share, comment and discuss!

Matthieu

For further reading:
DriveNow website

Why Nokia should enter the 3D Printer Business

I never worked at Nokia but I did work for them on a number of Consumer Data and Consumer Experience projects as Client Partner for a Berlin based mobile agency. That's the time where I saw first hand, back in 2009, how stubbornly blind they were to what was coming their way. I was one of their first clients back in the 90's when I got my first Nokia 1011 and always loved their phones. I had one till 2010 or so, the last one being the E71. Then came the iPhone, also for me, followed by the Android Tsunami and the rest is history. The latest Lumia models are nice, very nice indeed but I find it hard to believe that they can survive on a "Me has smart phones too". Although nice and refreshing Windows Phone is simply not the disruptive change and jump forward we'd all love to see and have as consumers.

So where should they go from here? My suggestion: they should enter the 3D Printer Business. Here's why.

From past to present

Look up Nokia and on Wikipedia you learn that this company started out in the wood pulp business and then went into the electricity generation business near Tampere in Finland. It added Rubber to its portfolio and started marketing rubber boots under the Nokia Brand Name. It then evolved into a conglomerate of businesses that included over a period of decades, telegraph and telephone cables, bicycles, robots, television, military communication equipment, gas masks and chemicals. The first step towards telecommunications was made in the 70's when they produced a digital switch for telephone exchanges which became the workhorse of the telco industry.

Through its military engineering experience Nokia started experimenting with wireless telephony in the 70's as well and they were directly involved in creating the first communication standards for wireless telephony. Its first GSM phone came out in 1989 and was delivered to Finish telco operator Radiolinja. From there, in less than a decade Nokia quickly dominated the mobile phones business with Motorola and Ericsson in its slipstream.

What does the history of Nokia teach us? Well, they have a lot of experience in engineering, designing and building electronic hardware and they have two decades of programming software for this hardware under their belt. But all of this experience is now at a critical cross road where they risk loosing lots of this heritage if their smartphone business strategy doesn't deliver.


What about 3D printers?

If you believe the hype, 3D printers are going to change the way we live and do business in under two decades from now.
For those who don't know here's why 3D printers are so important:

• They will change the way we produce an increasing number of products dramatically. From prosthetics, via glasses, household items and jewels all the way to the scandal inducing possibility of guns and rifles. 
• This new way of producing one off and personalized goods can potentially make a chunk of what's mass produced today redundant. It will open the door to a new type of retail commerce, i.e. specialized 3D printer stores, that are simply there to turn digital ideas into tangible objects. I'm sure you will see specialized stores springing up because not all printers can deliver all objects. You could metaphorically consider 3D printers as the last missing output module of the internet.
• Although the technology is still in a very early stage and end-results are not always satisfactory, its just a matter of time till we will buy a 3D printer for at home or in the garage and start using it to enhance our daily lives. 

3D printing today is in its infancy. You can buy a 3D printer today for a price that would buy you a sophisticated fridge or washing machine but defining 3D objects, using graphical software, is not an easy task. Of course one can find 3D printer forums and blogs by the dozen and they most will offer  some form of file sharing. Experimentation is still part of the process though but as said before, the promise of being able to print personal objects for a wide variety of applications is getting the attention of an increasing number of consumers, start-ups and businesses. 

So why should Nokia go into the 3D printer business?

Its my strong believe that if any company in the world is capable of entering this space and turning it into a strong new business its Nokia. As I pointed out before they have long standing history in hardware AND software manufacturing. My guess is also that they have access to a well trained workforce and an extensive line up of production partners around the globe. All that's needed is a nod from Stephen Elop and the creation of a 3D printer task force with a R&D budget attached. My  guess is that they'll be able to churn out a 3D printer with an easy to use interface and software within a year. They should not forget to leverage their experience in creating eco-systems. Anyone remembers Ovi or MyNokia? If they create an eco-system around these 3D printers using the same principles as Apple once did with Music and Movies via iTunes, they're in for a healthy future.

So, who introduces me to Mr. Elop so I can pitch the idea? :-)

Thanks for reading my Blog.

Matt

For further reading:
http://3dprintingindustry.com

If you want one yourself check Cubify

Branded in China - The Long Term View

Is Brand Management in China a waste of time? Recent research is starting to show that this is no longer the case. Brands have always been important for the Chinese but in the past this had more to do with status which in turn is more connected to price and exclusiveness.  The Chinese have begun to discover that good Brands come with attributes such as authenticity, quality and distinction. This change opens a road to building Brand Equity for Chinese and non-Chinese Brands alike. A recent visit to Beijing made it clear that there is a change from "Made in China" to "Branded in China".




In a market fraud with counterfeits anyone can have a Louis Vuitton bag. So the next thing is to have something genuine from a Brand or to adopt a lifestyle that gives the items an new dimension. But as one can read in the excellent study: The Rise of Chinese Brand Equity by Swiss Brand Valuation Experts BV4, there are a number of reasons behing the rising importance of Brands in China. Some of them are quite obvious and come with economical and social changes. The Chinese middle class is growing and is more and affluent. Contrary to the more collective behavior most Chinese grew up with there is a new tendency towards individualism. Partially this has to do with the one-child policy but being part of a growing middle class there is an increased desire to develop and position oneself as an individual.

The view from within China
On a recent visit to China I spoke about these changes with a good MBA friend, Alex Lin, CEO of Chinavalue.net, China's most influential Business Blog. He confirmed that a growing part of the Chinese are Brand Sensitive and Brand Aware. The German car brands come to mind but also the French luxury Brands are of growing importance. At the same time he acknowledged that local Chinese Brands are beginning to see that national but also internationally there is value in developing a clear Brand Strategy. 
Brand significance is not only important in Consumer Products. The Chinese travel easier not only because they are more affluent but also because travel regulations have been simplified over the past two decades. This means that the Chinese are also looking at education elsewhere in the world, specifically in the US and Europe. Also here they search for the better Brands, using the familiar rankings such as the one from the FT.

A European Brand coming to China
My brother Alain Vermeulen is CMO of Vitaminstore.nl. He decided two years ago to move closer to his IT-supplier who happens to be based in Xiamen, a city of 3 Million inhabitants close to Taiwan. 
In the mean time he has opened a webshop for his Vitamins and Food Supplement products and a first retail store in Xiamen. His experience is that the Chinese are sensitive to security that Brands could offer. This is specifically true for e.g. Baby Nutrition where a couple of major scandals have tainted the national food brands in China for years to come. The obvious step has been to start selling foreign Baby Nutrition, e.g. Milk Powder from New Zealand.
Yet there is still a lot of exploring to do according to Alain. The Chinese try things out but are less loyal which leads to fluctuations in demand. The optimal mix of Branded products under the Vitaminstore China Brand is still under close scrutiny but the first results are promising.


From China into the rest of the world
There are a great many Chinese Brands that we hardly know or see outside China. Yet Brands like Midea, Haier and Geely are well established in China. They now start to eye the rest of the world. A Brand like Geely 'bought' itself a ticket into the foreign car industry through the acquisition of Volvo. Volvo in return got itself a platform into China. On both sides this partnership still has to grow but one thing is sure. Once the Chinese have mastered safety and reliability issues a bit better they will become an important global player and with that a global brand. For both the Vitaminstore Brand on a small scale and Geely as a corporate giant one thing is true though; only trial and error will show these businesses how to build their Brands for both China and the rest of the world.

Social Media
In the end it is amazing how important Social Media is in China. Although almost none of the Western channels (Youtube, Facebook, Twitter) are officially accessible from within China, the local platforms such as Sina Weibo, are immensely important for the Chinese. They research Brands and Products, look at recommendations but also share experiences and if necessary the occasional warning for dangerous or counterfeited products and services.
The fact that in a society with so many cultural and historical differences Social Media are of equal importance shows one more time how Brands should embrace this channel instead of ignoring it.

The long term view for both sides
The Chinese government has started to address the importance of IP Rights. When building Brand Equity having some form of protection through Trademark Registrations and Patents can be vital. Increased legal action and control of counterfeiting helps the Chinese market also to gain a reputation as more brand friendly environment. This does not mean that it is all of a sudden very easy to establish a brand in China. The cultural and language barriers remain important. The Chinese on the other side will find it hard getting rid of the 'cheap and low quality' image of 'Made in China'. A Brand like Lenovo has managed by simply acquiring the IBM Thinkpad Brand. But the opportunities to buy your way into a Western market are scarce and should be carefully managed.
Fact is that we will have more Chinese Brands coming over, also of good quality with probably an exceptional price/quality ratio. And as for Branding in China itself, I think we're just at the start of an enormous task with an immense upside.
Brand Managers and Agencies, stay tuned!