Carsharing has already experienced a rapid growth since its introduction in Switzerland in 1987. In 2015 over 4.8 million members shared more than 104,000 vehicles worldwide and that number keeps growing at staggering rates both in developed and developing markets. While target demographic in emerging and mature markets seem to be similar – well-educated, middle-income, young to middle-aged urban residents, the consumer trends that power this growth in these two types of markets are very different and therefore require a different approach in consumer communication and marketing.
A lot is already known about carsharing customers in mature markets, as numerous consumer trend studies have shown us who uses shared vehicles. As in the rest of the world, it’s mostly urbanites, young people living in busy cities opting for car sharing due to its sustainability, impact on the environment and financial benefits. An estimated 55% of the world’s population were city-dwellers in 2017, up from 50% ten years earlier. So there is no lack of potential customers in this regard. These consumers are also likely to use other shared mobility modes like bicycles and scooters. Tourists and business people are other big categories that use shared vehicles.
One of the main consumer trends that powers car sharing in urbanites of mature markets is clean living. More and more individuals are opting for living healthy, more minimalist lifestyles with moderation and integrity as main values. These consumers are mostly in the 20-30 age group (aka millennials), they have strong beliefs and ideals and use these ideals in their spending habits. They are less concerned about ownership and more about access, they eat healthily, go to second-hand shops and visit a gym frequently. This group also is more likely to spend money on healthy leisure activities like going outside the city on weekend. Analyzing this group and its healthy living habits can provide a car sharing business owner with ideas about where its fleet could be most needed.
This trend overlaps with the general rise of sharing in a group often referred to as borrowers. This trend powers not only car sharing but also other shared economy markets like Airbnb or subscription-based services. Cars are the second most shared item (16%), with exercise equipment being most shared (19%), consumer electronics at 15% and clothing at 10%. This trend is particularly important for P2P car sharing operators, as these consumers not only like to share, but also these services provide additional revenue for them.
Another important trend in mature markets is the rise of activist consumer and call out culture. One survey found that in 2017 46% of US consumers voiced an opinion about a brand online, and the behavior of such activist consumers is similar in the rest of the mature markets. The same survey found that 65% of consumers say they research a brand before buying and a poor brand response was likely to trigger boycott by 50% of consumers. This puts particular emphasis on branding, as well as customer support – customer service in these markets is part of marketing.
These activist consumers conduct thorough research before acquiring something. They want to ensure that the values of the brand and its practices are in compliance with their strong beliefs. In car sharing this means, as a bare minimum, having sustainability and environmental values at the core of the service, but also going beyond and engaging in socially responsible practices in the cities where the business operates. Businesses not only need to respond to ongoing social development but also actively partake in them.
Activist researchers are also very skeptical and require transparency in business practices and strong evidence to support the brand claims, not just marketing materials. It goes without saying that not having appropriate information about these values online means that the researching user will not be interested in your service.
Lastly, the rise of extreme personalization means customers want a service specially tailored to them. They want to shape the product and the service that they are using – even though they do not own a vehicle, they want to own the experience. This means a carsharing operator has to customize the service to the user to the highest degree possible – and no, email personalization and just a discount on Christmas do not count.
While these consumer trends and demographics are quite broad and influence all consumer industries, their analysis on the local level can provide a business operator with invaluable information about growth possibilities.
In emerging markets carsharing has the potential to increase households’ mobility and access to goods, services, and opportunities. In some markets, this could result in big part of the population opting for car sharing, rather than owning a vehicle and in this way, carsharing could be an effective element of a sustainable transportation system.
Various studies suggest that market readiness varies widely in emerging markets, possibly due to income, access to information about carsharing and the availability of attractive transport alternatives such as motorized two-wheelers, auto-rickshaws, and taxis.
Urbanites are the main customers of car sharing in emerging markets as well. About 78% of the world’s urban population lives in Africa, Asia, and Latin America and the Caribbean, however, these regions accounted for only 20% of global carsharing membership in 2014. This is changing quickly though, mostly due to the fast adoption of carsharing in South America – Brazil, Mexico, and China.
In emerging markets, consumer trends aren’t as clear and ubiquitous as in mature markets and have more local character. Local social and economic changes in these markets can be very unique and therefore offer unique opportunities. For example, recent legislative amendments in Saudi Arabia that allow female citizens to drive constitute a unique social development with a great opportunity.
In emerging markets carsharing also faces several obstacles. Key barriers and opportunities can be put in 4 categories: transportation infrastructure, government, business and potential users.
Infrastructure might create serious hurdles for car sharing development in emerging markets – limited parking opportunities, traffic congestion and unavailability of public transportation might keep consumers off car sharing. Car sharing is often used as a complement to public transit, in areas where there is no good public transportation infrastructure, more people are likely to own personal vehicles or use semi-formal transportation like rickshaws. A government might also not be familiar with carsharing and might not know how to regulate. Business challenges mostly are clustered around the need for high capital investment to start car sharing operations and hurdles in scaling up.
However, all these challenges also provide strong opportunities. Alternatives to carsharing might be of poor quality (e.g. rickshaws) or expensive (personal driver). A government might have concerns about air pollution and might have aims of getting rid of traffic congestions (as in China). For businesses, the main opportunity lies in low labor costs.
In regards to obstacles from potential customers, an aspiration to own a vehicle can be very prominent. Some people might prefer to own a vehicle due to the economic and social status that a vehicle might bestow upon its owner. However, this also provides a great opportunity. Owning a vehicle is very expensive and having car sharing option might be attractive to a lot of people who want to use a vehicle but cannot afford one. For a business operator, this means concentration on the feeling of ownership – whether this is done through service personalization or some other method depends on the operator. Feeling of ownership also ensures that the vehicles are well-taken care of by the users.
Unfamiliarity with carsharing is probably the most important obstacle and requires a lot of investment from first-mover companies. While these consumers might be familiar with other forms of transport, they require strong persuasion about the advantages of car sharing. In this aspect, economic benefits play an important role. In emerging markets, consumers are more likely to be focused on economic prosperity and therefore need to be convinced that car sharing pricing is economically more beneficial to them.
Surprisingly enough, access to technology doesn’t seem to be a hurdle. Although, companies in emerging markets need to provide more access channels to their services, beyond smartphones.
Consumer trends from mature markets also tend to trickle down in economically more fortunate groups of emerging markets. A business operator might also want to experiment with catering to different variations of these mature market trends locally.
Car sharing, and generally shared mobility, is a very attractive economic and social choice for most demographic groups in both emerging and mature markets. Its limitless potential is well documented through growth of the market. Like in any other market, it is crucial to learn more about customers, not only their economic potential, but their social and cultural background to ensure they are provided with the service that they require.