J. Arturo Zapata
Executive President
Corporación Zapata
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View from the Top

Integrated Solutions Spell Success for Brand Purveyors

Mon, 09/01/2014 - 13:35

Q: What are the main trends in the Mexican market, and how do you anticipate them?

A: The market has evolved significantly, particularly as relating to large fleet customers. They are already demanding individualized solutions and not just a collection of parts and services for them to put together. When Corporación Zapata decided to provide integrated solutions for its customers, we did not see this as clearly as we do today, although we did have a bit of foresight. What customers want today is a turnkey solution. It used to be common for companies to hire 150 different suppliers to build a factory; today, people want to get a factory up and running in one stroke. That is how we see the market today and we need to be prepared to fulfill that need. There has been consolidation in our industry, but there has also been consolidation on the customer side. Serving customers is becoming more challenging and demanding; the market is also becoming tighter and the customer expects more from us. Integrated solutions are an effective way to move forward and provide value added services that can make a key difference.

Q: What are the main drivers of your value proposition in the primary consumer market?

A: Back in the old days, having a better financing scheme was a key asset; but as everybody started offering similar financing options, it was no longer a differentiator. Financing will always be a critical element, but financing instruments will have to become more sophisticated and personalized. The format of leasing a car for three or four years, then returning and replacing it for another one, has become very successful in the US market. This format has also become very popular with fleet customers in Mexico – where one of our subsidiaries, Ariza de México, is the country’s market leader in providing fleet management and leasing solutions. However, as consumer interest rates in Mexico continue to approach US levels, pure leasing will start becoming popular in the consumer market. Warrantees are another element that remains important. However, if first time owners are going to keep their car for only three to four years, extending the warrantee from five to seven years might no longer be perceived as an important value added feature.

Styling has always been a very important feature, particularly for the younger generation. However, the latest marketing trend today is to engage the customer into feeling identified with a particular brand; it is almost as if they belong to a particular brand. Therefore, most companies are trying to communicate that their brand stands for something that customers truly want to be part of. Some companies are doing this extraordinarily well in Mexico, such as Mazda and Volkswagen. These are indeed important drivers in today’s market. If a company can establish a solid reputation for quality, together with an image that the customers identify with, it will truly pay out financially.

Q: How much of a brand’s success relies on the quality of the car by itself, as opposed to the skills and capabilities of the service support that people receive when something goes wrong?

A: A little more than a decade ago, Ford Motor Company did a very thorough market study in the US to better understand customer’s brand loyalty. One incredible finding was that customers who had experienced a problem with their car, and had then received great service at their preferred car dealership, became far more loyal to the brand than those customers who never had a problem with their car in the first place. This was truly an eye-opener for me as every time a customer has a problem, it creates an opportunity for us to build a relationship for a lifetime.

Q: How do brands communicate directly with potential customers in Mexico?

A: Brands still communicate with customers mostly by advertising in traditional media, but they are relying on it much less than before. Most brands have realized that communicating with customers in a timely and relevant way can prove much more effective. For example, we do most of our own marketing and advertising through Autocosmos. com. This webpage, founded in 2000, provides automobile owners with all the information that they need, before they decide on which car to purchase. All of the information is delivered in an impartial, timely and relevant way, including test drive feedback. It is also a terrific platform for those of us who want to deliver a message or provide a useful perspective to these potential customers, just as they are considering which car or light truck to buy. Autocosmos. com has now become the leading automotive website in the eight largest Spanish speaking countries in Latin America, including the US Hispanic market.

Q: As cars improve in both their durability and performance, what will drive people to continue renewing their vehicles?

A: Some claim that having better cars will deter people from renewing their cars frequently. I do not know if this will eventually happen, but what I do know is that car companies have no other option than to continue improving vehicles. A car is one of the most expensive purchases people make, and the decision can be a deeply personal one. Could cars lose this element and become a commodity strictly aimed at transportation? It could certainly go that way. There are already car-sharing systems in which people who need a car for a certain amount of hours, pick it up at an agreed location and then simply drop it off at another. Car models and features could become less relevant in such a system. On the other hand, I believe that technology will play a key role in making cars more personal to buyers, in the same way that customers identify themselves with their cellphones. My take is that cars will start doing much more of that, resulting in people wanting to change cars sooner, in order to take advantage of the new features that technological advancement will make available, such as improved fuel consumption and security features; but undoubtedly there will be many other electronic features that will help people enjoy their car even more. Obviously, we do not anticipate that current cars become obsolete, but those customers who can afford it, will want to buy a new car because of new technology which will add more enjoyment to the driving experience.