a

Jaguar LandRover:

TowardsaCustomer-Centric Organisation

Leveraging Customer Intelligence andDataAnalyticsforSustainable Growth

03/2018-6354

This case was written by Joerg Niessing, Affiliate Professor of Marketing, and Brian Henry, Research Fellow, both at INSEAD, and Kay Peters, Professor of Marketing, University of Hamburg. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

AdditionalmaterialaboutINSEADcasestudies(e.g.,videos,spreadsheets,links)canbeaccessedatcases.insead.edu. Copyright 2018INSEAD

COPIESMAYNOTBEMADEWITHOUTPERMISSION.NOPARTOFTHISPUBLICATIONMAYBECOPIED,STORED,TRANSMITTED,REPRODUCEDORDISTRIBUTEDIN ANYFORMORMEDIUMWHATSOEVERWITHOUTTHEPERMISSIONOFTHECOPYRIGHTOWNER.

This document is authorized for educator review use only by Tuhin Sengupta, Goa Institute of Management until Jan 2021. Copying or posting is an infringement of copyright.

Jens Sulek, Director of Global CRM & Customer Insights at Jaguar Land Rover, was looking at customer data for the F-Pace, the first SUV ever made by Jaguar in its 95-year-old history.1The F-Pace had been unveiled at the International Motor Show Germany in Frankfurt in September 2015, just one month before Sulek had started working at the wholly owned subsidiaryofTataMotors. ItwasnicetimingfortheGermanexecutive-theF-Paceturnedout to be hugely popular among Jaguar customers, especiallywomen.

Aseasonedexecutivefromtheautomotivesector,SulekhadworkedatPorscheinGermanyfor 10 years before being hired by the British car brand. His experience made him a good fit with JaguarLandRover.²DuringhislastfewyearsatPorsche,revenueshadalmostdoubledthanks to the popularity of two SUVs, the Cayenne and the Macan, whose combined sales made up 70% of total revenues in 2016. In addition to his experience, Sulek had an MSc in Information SystemsandMarketing.AtJaguarLandRoverhewasresponsiblefor240employees,including 190 customer relationship management (CRM) specialists and 50 business analysts who made up one of the largest CRM projects of its kind in the industry. His goal was to improve the systems and processes driving customercentricity.

Jaguar had seen a transformation since 2008, when Ratan Tata, former CEO of India's Tata Group,boughtJaguarandLandRoverfromtheAmericanautomakerFordfor$2.3billion,and beganinvestinginthetwoBritishbrands.JaguarLandRoverhadsincebecomeoneoftheUK's largest exporters, generating 80% of sales abroad, and its workforce had grown to 40,000 people. Jaguar Land Rover opened its first overseas plant in China in 2014, and another in Brazil. Ithad also contracted with Magna Steyr to produce vehicles in Austria. Its expansion strategy was designed to strike a balance between diversified geographies and the benefits of globalprocesses.

Industry Challenges Affecting Customer-Centricity

The automotive industry is one of the largest and most international in the world. Some 20 major global automotive companies currently produce around 100 million cars per year. There are over a billion light vehicles globally. The industry provides over 7 million jobs in the United States, and close to 13 million in Europe.³

During the global financialcrisisin 2008-2009, automotive salesfell at

near-recordratesworldwide.Sincethen,autosaleshadreboundedlargelydrivenbythemarket inChina.Chinesepassengercarsaleshadseenathree-foldincreasefrom2007to2017from

1. For pedagogical purposes, this case focuses mainly on Jaguar.
2. https://www.ft.com/content/2c198d88-9d14-11e7-9a86-4d5a475ba4c5,accessed 26 September2017
3. https://www.ft.com/content/31f191d4-72c0-11e7-93ff-99f383b09ff9,accessed 4 August 2017

1. millionto11.3million.Salesintheothertopsixmarketshadonlyrecoveredto2007levels a decade later (seechart).⁴

But what if the Chinese market suddenly cooled? Indeed, this appeared to be happening. Passenger car sales in China rose by just 2.7% in the first half of 2017, compared with an 11% increaseinthefirsthalfof2016.Furthermore,pricediscountsrepresentedupto4%inthefirst half2017.Meanwhile,theusedcarmarkethadbecomemoreattractiveasthequalityofvehicles 'made in China' improved. The average life of a Chinese-made car rose from three years in 2012 to 4.5 years in 2017. These figures were a cause for concern among western automakers (like Jaguar Land Rover) which had made China a focus of their growthplans.⁵

Sales of traditional cars had also been affected by government policies, as in Norway, where buyers were incentivized to purchase hybrids and electric vehicles (EVs). As a result, Norway was the world leader in sales of energy-saving vehicles: 35% of new cars sold were either hybrids or EVs, and a target date of zero emissions from new cars was set at 2025.

Local government was also pushing to bring air quality under control in cities like Paris and Beijing. In the UK and France, there was a ban on new petrol and diesel car sales from 2040. China, India and Norway were considering similar bans that could take effect earlier.⁶

Indirectly,theCAFE(CorporateAverageFuelEconomy)standardsmadeitmoreexpensivefor carmakers to build gas-guzzling cars by introducing penalties. Seven of the world's 11 largest carmakerswereoncoursetomissCOtargetsby2021.VWpotentiallyfaceda1.7billionfine for exceeding the CO limit on its cars. According to PA Consulting, only Volvo, Toyota, the Renault-NissanAllianceandJaguarLandRoverwereontracktomeetrequirements,⁷andeven theymightmissthetargetiftherewasashifttopetrolcars,whichemittedmoreCOthandiesel.

While the global market for pure EVs was still tiny - accounting for less than 1% of sales in 2016-ithadgrownsoquicklythatVolvoCarswasthefirsttoannounceplanstoswitchtoEV production.OwnedbyChinesecarmakerGeelysince2010,Volvosaiditwouldstopproducing vehiclespoweredsolelybyaninternalcombustionenginein2019andequipeverymodelwith an electric motor.⁸ Others followed suit. Jaguar Land Rover announced that all new models would come with the electrified option from 2020. Tesla, which produced only EVs, had launched its Model 3 with a base price of $35,000, designed for the massmarket.

With so much hype about hybrids and EVs, many car owners were concerned about the future value of their traditional combustion-engine vehicles.⁹ Like a computer on wheels, an EV is simpler and cheaper to produce than an internal combustion engine vehicle because it has far fewer parts. Employees of traditional carmakers were concerned too, as it was estimated that the demise of combustion engine cars could result in the loss of millions of jobs.¹⁰

4 https://www.ft.com/content/47351708-786c-11e7-90c0-90a9d1bc9691,accessed 5 August2017

1. Ibid.
2. https://www.ft.com/content/09b589d8-71e8-11e7-aca6-c6bd07df1a3c,accessed 4 August2017
3. https://www.ft.com/content/e9e61f9a-9e2a-11e7-8cd4-932067fbf946,accessed 26 September2017
4. https://www.ft.com/content/471cd6e2-60bc-11e7-91a7-502f7ee26895,accessed 4 August 2017 9 https://www.ft.com/content/891d8264-5016-11e7-bfb8-997009366969,accessed 28 June2017
5. https://www.ft.com/content/31f191d4-72c0-11e7-93ff-99f383b09ff9,accessed 4 August 2017

Theconsumer'sconceptionofcarsandcarownershipwaschanging.Self-drivingcarsandride- sharingplatformshadbeguntocaptureattention.¹¹'Driverless'technologypromisedtoreduce energy costs¹² and traffic fatalities.¹³ Likewise mobility platforms had opened up new vistas where vehicles could be made available to any driver¹⁴ who had a smartphone app to locate a platform-owned car, drive it for as long as they wanted, and then leave it parked for the next user.¹⁵ Instead of car brands, drivers could go to their favourite mobilityplatform.

Digital technologies like virtual reality (VR) and its partner augmented reality (AR) were expected to change driving habits. When planning shopping trips or on holidays, these technologieswouldenablemoreinformeddecisionstomeetcustomers'needs,possiblycutting down on time spent behind the wheel. Instead of feeling compelled to attend a graduation ceremony in person, for example, they could "virtually" be in the same place with friends and family.¹⁶AsVRbecamemoresophisticatedandeasy-to-use,employeescouldworkfromhome ratherthandrivetotheoffice,whichinturncouldreducecarownership.¹⁷Moreworryingly,in a future where cities were increasingly congested, local authorities might crack down on car ownership.¹⁸ Was the two-cars-per-family modelsustainable?

Given the challenges and trends emerging, it was difficult for Sulek to predict what customers would want. He could only be certain of one thing: disruption. Today's business models and manufacturingportfolioswouldgivewaytonewnorms.Forecastingcarsaleshadalwaysbeen a challenge, but now it was imperative to move from a product-centric to a customer-centric focus.

Background: Jaguar and Land Rover

Founded in 1922, Jaguar had a history of producing beautifully engineered cars with a reputation for solid performance and road handling. It took great pride in its sporting heritage, winningmajorsportscarenduranceracessuchasFrance's24HeuresduMans,oneofthemost prestigiousautomobileracesintheworld.Customerswholikeditsefficient,high-performance vehiclesthatcompetedontheracingcircuitshadalwaysbeenattractedtothestylishUKbrand. However, in 2004, Jaguar's owner Ford restructured its ailing British subsidiary in order to reduce excess capacity and overheads, and withdrew Jaguar from Formula Oneracing.¹⁹

1. http://www.foxbusiness.com/features/2017/08/16/fiat-chrysler-joins-bmw-led-self-driving-car-tech-alliance.html, accessed 18 August2017
2. https://ensia.com/features/are-self-driving-vehicles-good-for-the-environment/, accessed 26 June2017
3. https://www.ft.com/content/37ce64f6-5ad8-11e7-b553-e2df1b0c3220,accessed 28 June2017
4. https://en.wikipedia.org/wiki/DriveNow, accessed 28 June2017
5. https://reachnow.com/en/, accessed 26 June2017
6. http://www.the-future-of-commerce.com/2016/02/17/commerce-virtual-augmented-reality/, accessed 18September 2017
7. http://www.hsbc.com/news-and-insight/insight-archive/2016/can-virtual-reality-overtake-driverless-cars,accessed 18 September2017
8. http://www.mirror.co.uk/news/world-news/cars-future-revealed-tech-experts-8794013, accessed 18

September 2017

1. Jaguar Cars, by Matthias Hild, University of Virginia Darden School Foundation, 2004, business case ref.: UV3878, p.1

AlthoughJaguarneverreturnedtoF1,itwasthefirstmajorautomakertolaunchanewclassof auto racing that used only electric-powered cars, Formula E. Following its lead, other luxury and premium auto manufacturers announced plans to compete, including Audi, BMW, Mercedes-BenzandPorsche.NotevenFormulaOnehadsuchadensityofrespectedcarmakers on the racing circuit. Jaguar had decided to support the Formula E calendar with an additional single-make racing series featuring the I-PACE, a premium EV that combined zero emissions and stylishdesign.

WhileJaguarhadalwayshadacoherentsportsnarrative,somearguedthatatitscorethebrand personalityhadnotbeenconsistentovertheyears.LandRover'swasmoregrounded.Itstarted with the four-wheel drive Land Rover One series, launched at the Amsterdam Motor Show in 1948. Built to last, the simple yet rugged Land Rover was a major success with ranchers and farmers, industrial engineers and militarypersonnel.

In1970,thecompanyintroducedamoreexpensiveversion,theRangeRover,whichcombined luxury with ruggedness. The Range Rover created a coveted niche for itself - so much so that in1990theoriginalLandRovermodelwasrenamedDefender(toavoidconfusion).Production of the Defender was halted in 2016 as it could not meet modern environmental and safety standards,²⁰ but it was expected to return as an all-terrain vehicle in 2019. The Range Rover continued to be positioned as the leader of the SUVsegment.

Jaguar and Land Rover had always been completely separate British brands with little in common until they were brought together by Ford as part of an ensemble of four European premium car makers. In 1989, Ford acquired Jaguar. Eleven years later, it bought Land Rover, thenaddedbothbrandstoitsnewlycreatedPremierAutomotiveGroup(PAG)whichincluded Aston Martin and Volvo.²¹ Hit by falling profitability in the mid-2000s, Ford ultimately sold the PAG: Aston Martin in 2007, Jaguar and Land Rover in 2008, and Volvo in2010.

In 1998, 10 years after Jaguar came under Ford's ownership, the decision was made to move production to a factory in the UK that had been making the Ford Escort for the previous 35 years.TheintegrationofthecompletelydifferentvehicleintotheEscortlineofproductiontook two years to complete. "The need of Jaguar was [] to concentrate on delivering the culture change and really getting through to people...whereas the requirement from Ford was to produce an Escort every 41 seconds."²² The Ford Halewood plant had a rigid product-based culture that worked against the new arrival, and management eventually called upon a consulting firm to "help change attitudes, behaviour and values of the employees throughout theplant."²³Whileittooktimeandefforttomakechangehappen,theepisoderevealedtheneed for Jaguar to establish a more coherent brand personality and a long-term customer-centric vision.

1. Return of Jaguar's Land Rover Defender relished by off-road fans, by Peter Campbell, Financial Times, 4 March2017
2. HouseofTata:AcquiringaGlobalFootprint,TarunKhannA,KrishnA.G.Palepu,andRichardJ.Bullock, Harvard Business School Case Study, Ref. 9-708-446, 30 June 2009, p.12
3. This episode in Jaguar's history is covered in great depth in Jaguar comes to Halewood: The Story of a Turnaround, by Ramina Samii, under the supervision of Luk N. Van Wassenhove, March 2015, INSEAD case number: INS838, p.4
4. Ibid, p.8

Moving beyond a product-based strategy, however, only began under the ownership of Tata Motors, which turned Jaguar Land Rover into a carmaker that offered real solutions to both customers and employees.

A Customer-CentricApproach

While the product-centric approach had served Jaguar well and its reputation for world-class engineering set the brand apart, Sulek knew that it was vital to remain relevant and engaged with its customers, particularly given the changes in the industry. Two years after saying goodbye to Ford, Jaguar Land Rover adopted a new customer-centric approach. Buoyed by Tata'sgrowthstrategy,itinvestedheavilyinasingleglobalCRMsolutiontorevolutionizethe way the brand interacted with customers. However building the CRM solution was never perceivedasaquickfixbutratheralabour-intensive,day-to-dayprocessthatwouldtake years to implementfully.

To take the customer-centric approach to the next level, Sulek built an enterprise management platform to embrace the entire organization and its processes. For this, he needed to feedback from, and knowledge about, its customers. He also had to develop analytical techniques and intelligence methodologies. To do so he put himself in the shoes of a potential Jaguar buyer. By visualizing the 'customer journey' he could pinpoint and perhaps optimize the touchpoints between the customer and the company.

In the pre-purchase phase, for example, the marketing department often played a vital role in answering customer questions. Once the purchase was made, the sales department transferred ownership of the vehicle to the customer. Then, the after-sales department looked after customerneedsinmaintainingthevehicle.Tocreateaseamlesscustomerexperience,theCRM teamshadtoensurethateachdepartmentwaspartofawhole-ajoined-uporganizationgreater than the sum of its parts. By having a holistic approach the organization would also be more responsive to its evolving customerbase.

Atypicalcustomerjourneywoulddifferbysegmentorregion,butSulekwasconfidentthathis customer-centric approach could optimize the customer journey at both the brand and product levels,awarethatcustomerswouldlikelytakeadifferentroadtocarownershipinthefuture.

Optimising Touchpoints

Keepinginmindthetrendsintheautomotivesector,Sulekdevelopednewtouchpointstokeep communications relevant to customers in a fast-changing environment. Currently, customers either leased or owned vehicles, with the vast majority committed to the ownership model. Ifcar-sharing services, for example, were to become more relevant and less risky, future clients might have less incentive to own a car, be it an EV or internal combustion engine (ICE). Likewise if urban congestion and inner city pollution were to become more pronounced, local governments might offer incentives to car owners to share their cars on mobility platforms or simply rent one whenneeded.

For now, Sulek's aim was to optimize the main touchpoints along the customer journey by leveraging customer intelligence to give Jaguar Land Rover a competitive edge, as in the following examples:

• A customer coming to the end of a leasing contract. As this represented a critical point in the customer journey, the CRM team could help the customer explore the options available. The marketing department could be notified that a direct marketing letter should be sent to the customer (or appropriate retailer) with an invitation to test driveasuccessorcar.Thesalesdepartmentcouldbeinformedaboutapossiblerenewal of the leasing contract or purchase of a successorcar.
• A customer who had just bought a car and was waiting to take delivery of it. At a local dealership, customers could customize a vehicle according to their preferences - the ensuing fabrication process could take up to five months depending on the level of customization. Delays were subject to local market conditions (e.g., customers in the United States preferred to buy directly from a dealer and opted for less customization). Sincecustomerscouldchangetheirmindsduringthefabricationprocess,theCRMteam would inform sales that they could communicate with the customer as the car was working its way up the line of production (photos of the car could be sent to the customer, or questions answered about the ongoing production process). By so doing, they reassured customers that they had made the right purchase decision. Activating businessintelligenceallowedtheCRMteamtoconveyrelevantandtimelyinformation at eachtouchpoint.

In addition to customer intelligence, Sulek exploited a number of analytical techniques to understand customer preferences. By 'embedding' the customer in the entire business and/or customer lifecycle, the company could continue to produce cars that outperformed the market even in the most turbulent times.

CollectingDatathroughCustomerIntelligenceduringthe ProductLifecycle

Whenlaunchinganewmodel,Suleklistenedtothe'voiceofthecustomer'duringthepre-and post-launch phases so as to consider their suggestions during the launch cycle, be it for minor product changes or brand repositioning. Co-creation between customers and engineers began whentheideawasstillbeingdefinedin'conceptclinics',aboutfouryearsbeforethevehicle's actual launch, allowing individual needs to emerge. By listening to customers at 'pricing clinics' (held a year before launch), he could forecast volumes and perform price-demand simulations.

Indeed the customer's voice continued to be heard up to three years after the launch, during whichtimesurveyswerecarriedouttomeasureproductdependabilityandtomonitorsalesand service satisfaction, with the findings amplified by word-of-mouth feedback. With a typical model having a lifecycle of seven years, the customerif engaged throughoutcould shape the evolution of a (more successful) successormodel.

Sulek needed to enhance customer profiles for both the Jaguar and Land Rover brands, since target customers could differ and change over time and across geographies. He used a variety of analytical tools in conducting market research. Quantitative research told him who the

potentialbuyersineachregionwere,i.e.,age,gender,income,occupationandwhatotherbrand vehicles they owned. He discovered interesting differences in income and age. For example, average household income for buyers of Land Rovers in the United States was $243,000, but in the UK it was half that. The average age of buyers in America was 47,but in Britain it was

57. Did this mean that the British saved the money to fund the purchase or that Americans borrowed more? It required further qualitative research to understand such differences.

Qualitative research yielded better profiles of potential customers that were not just based on demographics. Thanks to insights on desires and attitudes, he could sub-divide customer profilesbyregion."Thedatacandifferalotbysegment,"Suleksaid."Onethingwearealways carefulaboutisusingtherightresearchtechniquesfortherightsituation.Withsomanyresearch techniques, we need to make sure not to use the wrongone."

He also deployed ethnographic research to study the particular context and lifestyles of customers, using that information to strengthen the relationship between the target customer and the brand. Vehicles made by Jaguar Land Rover met basic needs for independence, freedom, social status and family harmony, but customers varied in their motivation to buy a particular model according to cultural context and attitudinal influences. By developing ethnographic profiles, Sulek could bring the right customers closer to the brand. First, desk researchpinpointedthecharacteristicsofthetargetcustomerbyuncoveringthemotivationsfor purchasing a car and its 'role' in their life. Second, focus groups uncovered lifestyle markers such as leadership qualities, family relationships and socialnetworks.

In addition, social media listening was used to deliver forecasting and future insights on consumer behaviour that resonated with Jaguar's marketing department and were aligned with corporate strategy. Popular social media platforms revealed upcoming trends and uncovered developments in the fast-changing automotive sector, such as 'connected' drivers who used a cloud-service provider for news and entertainment.

In January 2017, Jaguar Land Rover entered into a long-term partnership with CloudCar, a leading developer of connected driver experiences.²⁴ By taking a $15 million minority stake in the firm, Jaguar Land Rover could use its cloud services platform to keep costs low while improvingcustomerservices.Withmachine-learningcapabilitieslinkedtodozensofelectronic sensors in each car, the platform allowed Jaguar Land Rover to improve voice-activated applications and improve on-board infotainment, while maintaining its brand identity and retaining ownership of data. The new cloud services platform would be rolled out in Jaguar I- Pace.

Finally, the team learned to use tools such as virtual reality equipment, asking participants at carclinicstowearVRheadgeartoassessdigitalmodelsofnewcars-therebycuttingexpenses (theproductionandshippingoffull-scalephysicalmodelswouldhavecostmuchmore).Itwas also easier to show participants variations on the digital model using VR equipment than to present versions of physicalmodels.

Reflecting on the potential of these traditional and more advanced methodologies, Sulek wonderedhowbesthecouldleveragethedifferentdatasourcesandwithwhattechniquessoas

1. http://media.jaguarlandrover.com/news/2017/01/jaguar-land-rover-increases-stake-connected-car-programme, accessed 21 August2017

touncoverhiddenopportunitiesorenhanceexistingservicessothatcustomerneedswerebetter met.

LeveragingDatathroughSmartDataAnalyticsvs.BigData Analytics

Collectingdatawasonething;interpretingitwasanother.InSulek'smind,datashouldhelpto solve a decision problem, so applying the right analytical techniques to the right data was critical. By increasing the use of electronic systems to improve the performance, safety and passenger comfort of Jaguar cars, e.g., collecting data from sensors installed in "connected" cars,hecouldsuggestrelevantenhancements-inreal-time.Sensorsdiscoveredthatthousands ofJaguarcustomersinbigurbanareassatintrafficjamsmoreoftenandforlongerperiodsthan customersinruralareas.Thisinformationtranslatedintomarketingandcommunicationaround more comfortable interior designs for urban customers. It sounds simple, but having the facts tobackupproposedmodificationscanrepresentaneededboostwhenresourcesarelimited.

CompanieswerealsostartingtoanalyseGPSdatatounderstanddrivingbehaviour,andusethe data for pro-active maintenance. With GPS data at hand, Sulek could tailor the marketing campaign for a potential new car that 'matched' specific types of drivingbehaviour.

Sulek also used choice-based conjoint analysis to figure out preferences for particular Jaguar models at different price points in the pre-production phase. This de-compositional simulation tool reduced uncertainty for the marketing department when forecasting the output of new vehiclesinparticularmarketsatgivenpricepoints.Byusingconjointanalysis,hecoulddefine price elasticity by simulating output volumes against a sliding scale of prices and locate the 'sweetspot'.

Jaguar Land Rover's presence on social media platforms also enabled interaction with customers. Facebook followers of the Jaguar F-Pace, for example, could learn about safety features to be rolled out in the future. Car owners could book a service online. Having fully embracedthedigitalworld,SulekdiscoveredahostofnewpossibilitiestoenhanceJaguarLand Rover's customer-centre approach.

He was also curious to see whether AI and statistical models could help him fine-tune buying trends in the car industry. By employing them, he could more accurately forecast consumer behaviour such as an individual customer's propensity to buy a new vehicle at any given time. This allowed Jaguar Land Rover to communicate effectively with customers, sending relevant marketing messages at the right time.

The Road Ahead

InreflectingontheextraordinarysuccessoftheF-Pace,SulekbelievedthatJaguarLandRover had a bright future. It had recently announced it was hiring an additional 5,000 engineers and technical staff to prepare for the development of self-driving cars and EVs. The company's growth projections had never looked more promising. Putting the customer at the core of the business was a sure way of turning that vision into areality

1. What were the key changes that Tata Motors made to Jaguar and Land Rover after Tata

acquired the two brands from Ford in 2008? How and why did Tata make changes to the

strategy?

2. What does a typical customer journey look like in the automotive industry? Will this change in

the future?

3. Why is a product launch cycle important? What does a typical launch cycle of a car look like?

What are the key objectives of JLR at each stage?

4. What data should be collected to ensure that JLR retains a customer-centric approach? How

should the different data sources be structured?

5. How has digitalization transformed the automotive industry? What type of customer

intelligence techniques and methodologies should JLR leverage to understand customers? Are

some methods more appropriate at different stages of the launch cycle?

6. What is JLR's brand positioning? How has it changed since Tata acquired the brand?

7. What are the recent trends in the automotive industry and how have they affected individual

carmakers?