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Transformation Through Insight in the Short Term Truck Rental Market

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Short Term Rental
The Changing Market
As presented at the Market Research Society (MRS) conference
Driving Transformatio...

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Jungheinrich at a glance

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Background
• Fork Lift Trucks aren’t sexy but the global
market is worth around $30 billion a year so
the prizes are big...

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Jungheinrich MRS 4.10.17
Jungheinrich MRS 4.10.17
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Transformation Through Insight in the Short Term Truck Rental Market

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How Sapio's design-thinking approach complemented the engineering-strong style of Jungheinrich, to develop an entirely new truck acquisition and charging model based on the use of Telematics. The audience understanding work even lead to the reinvention of the brand promise.

How Sapio's design-thinking approach complemented the engineering-strong style of Jungheinrich, to develop an entirely new truck acquisition and charging model based on the use of Telematics. The audience understanding work even lead to the reinvention of the brand promise.

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Transformation Through Insight in the Short Term Truck Rental Market

  1. 1. 1 Short Term Rental The Changing Market As presented at the Market Research Society (MRS) conference Driving Transformation Through Insight +44 (0) 207 2361 60
  2. 2. 2 Jungheinrich at a glance
  3. 3. 3 Background • Fork Lift Trucks aren’t sexy but the global market is worth around $30 billion a year so the prizes are big • It’s a mature market with limited product differentiation • It’s brutally competitive • Performance standards and Customer satisfaction levels are unbelievably high • Service rather than product is increasingly the differentiator • Acquisition and usage pattern methods haven’t changed for a number of years
  4. 4. 4 What prompted the idea/innovation? • Background • Framing the idea • Developing the idea • Concerns over the development and introduction of the concept • Challenges experienced • Tactical product extension Vs strategic change to the “brand” proposition
  5. 5. 5 Becoming a Disruptor Brand The Established Market The Business Challenge Redefining short term rental • Trucks acquired through 3 or 5 year lease agreements or purchased outright • Additional needs met through short term weekly rental agreements • Standard invoicing terms - monthly in arrears • Fixed charges regardless of utilisation levels • A large used truck park • Relatively long lead times for short term rental • Introduce a more flexible business model to meet the changing needs of the market • Create a new market and align the brand with it • Ensure the new proposition wouldn’t cannibalise existing revenue streams • Introduce new technology (Telematics) • Develop alternative charging models • De risking • Changing mind sets • Being part of a global group headquartered in Germany
  6. 6. 6 The Information Challenge • Scale and nature of the short term rental market • Criticality of current hire and charging models • Was there an appetite for an alternative approach? • Key drivers of short term rental • Changing demand patterns • Channels used to source and book trucks • Acceptability of current lead times • Features and functionality expected from short term rental trucks • Establishing a price point • Jungheinrich at the prototype and test phase
  7. 7. 7 What is Design Thinking? “Design Thinking is a methodology used to solve complex problems, and find desirable solutions for clients. A design mind-set is not problem-focused, it’s solution focused and action oriented towards creating a preferred future. Design Thinking draws upon logic, imagination, intuition, and systemic reasoning, to explore possibilities of what could be - and to create desired outcomes that benefit the end user.” Inspired Rooted Progressive
  8. 8. 8 Contextualising the Process Commercial (Viability) Technology (Feasibility) Market (Desirability) Design Thinking Emotional Innovation  Brands  Relationships  Marketing Process Innovation Functional Innovation The Innovation Experience
  9. 9. 9 Understanding the Challenges The component parts Technology (Feasibility) Market (Desirability) Commercial (Viability) • Telematics & remote access • Driver Profile • Online Payment systems • Online order placement • Price Point • Delivery times & costs • Risk • Delivery hubs • Appeal of current charging methods • Booking Channels (Manufacturers/dealers) • Uncertain Demand
  10. 10. 10 Scope of Research Programme • 300 interviews with the person responsible for Fork Lift Trucks in organisations that used trucks on a short term rental basis • Mixed Methodology: online and telephone interviews • Van Westendorp price sensitivity testing
  11. 11. 11 : Do you agree with any of the following statements about the options currently available to you for hiring short term rental trucks in general? (Total) The traditional “9-5” approach of short term rental looks to be out of sync with todays 24-7 demand patterns and quicker delivery of hired trucks is a market requirement. • It looks as though the short term rental market has failed to evolve to meet the changing needs of the market • A quarter feel that the truck rental market is out-dated compared to other rental markets • The faster pace of operations and demand patterns are putting pressure on lead times for rental trucks 21% 21% 25% 51% 61% None of the above, the options currently available always meet my requirements The payment options aren't flexible enough to best meet my requirements The options currently available are mostly outdated compared to other rental markets I could benefit from quicker delivery of hired forklifts The 9-5 approach of most truck rental services is out of sync with today's 24-7 demand
  12. 12. 12 : How interested would you be in a short term rental system that charged for truck usage according to the number of hours it was used, based on data from a telematics system, rather than a fixed term agreement? Would you prefer a system that offered? (Total) 65% 35% A lower hourly rate if you agreed to take a minimum number of rental hours A higher hourly rate that was fixed regardless of the number of hours used. There’s significant interest in a system that charged according to the number of hours used but the majority would prefer a rate based around minimum hours taken. • There is a high level of interest and acceptance in using a system based on data from telematics systems • Hiring by the hour would enjoy strong levels of support in the market • Given the “newness” of these propositions levels of interest and support are very high 24% 38% 38% Not interested Moderately Interested Extremely interested
  13. 13. 13 : If you were looking to hire a counterbalance truck on an hourly basis for a minimum of 600 hours at what price would you consider the truck hire: £4 £5 £6 £7 £8 £9 £10 Too Cheap Not Expensive Not Bargain Too Expensive Resistance point Max Optimum Receptivity point Min optimum The Price Point Challenge 800 hours 600 hours
  14. 14. 14 Key take Outs - Positives • Market - Desirable • Current acquisition patterns are dated • There’s appeal in daily rather than weekly hire • A new model to suite agile, fast moving businesses. • There’s disappointment in delivery times • Commercial - Viable • “Power buy the hour” is an alternative to traditional acquisition models • Manufacturers are the key channel for short term rental • The importance of traditional “hire channels” could act as a barrier to new entrants • Cost is important but it is one of four key drivers • Demand levels seem stable • Technical - Feasible • Telematics data is acceptable and trusted • Current channels to market are important
  15. 15. 15 Key Take outs - Challenges • Market - Desirable • Changing mind sets from weekly to daily hire could be challenging. • It’s conservative market • There’s a strong preference for being invoiced monthly in arrears • Commercial - Viable • x% of sites with more than 3 trucks don’t use short term rental • Expectations around hourly charge out rates might be difficult to achieve – price sensitivity • Potential for cannibalisation? If short term hire really grows could it impact traditional contracts? • Technical - Feasible • Traditional hire channels might be expensive to maintain and could impact margin • Expectations around charge levels for immediate delivery might not make sense commercially
  16. 16. 16 Taking the Proposition to Market Emotional Innovation  Brands  Relationships  Marketing Functional Innovation Process Innovation • The redefinition of short term rental • Repositioning the brand • Developing a new Go To market strategy • Current acquisition methods are dated and alternatives based on new technology are acceptable • Positioning the proposition in a conservative market • Invoicing preferences and new payment systems • “Buy the hour” based on telematics is acceptable • “Owning” channels to market is a traditional approach and a barrier to entry • “Aligning” pricing structure to market expectations – Commitment Vs Flexibility
  17. 17. 17 Prototype and what next • Educating sales teams • Changing internal perceptions to drive commercial alignment • Proof point of Jungheinrich’s innovation as a premium brand • Launch of app for customers • Retest and refine • Global roll out
  18. 18. 18 DISCOVER.VALIDATE.CREATE team@sapioresearch.com Phone number: +44 7872 024910 – Guy Washer +44 (0) 207 2361 60

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