Telematics: A market in search of customers

Telematics services have yet to enter the car buyer consciousness in any critical mass.

The exception is OnStar, General Motors’ telematics service subsidiary. Mike McEnaney, OnStar’s (onstar.com) vice president of marketing and sales, says strong brand awareness is critical as competition develops.

According to some estimates, consumers have flocked to the safety and security features that tele-matics systems have offered from the beginning, such as automatic notification to a call center if an airbag is deployed. But analysts predict that the provision of these basic telematics services soon will become expected by consumers to be a standard feature of every vehicle.

Not so sure

Consumers are ambivalent about embracing some next-next-generation telematics services, such as piping video entertainment to rear passengers and notifying drivers of special retail promotions for stores they may be nearing. More than half the respondents in a survey by

consulting firm Gartner Inc.

(gartner.com) of Stamford, Conn., for example, saw the potential for advertising and location-based store promotions as annoying, or not important at all.

“People don’t want to be bombarded with anything,” says Clem Driscoll, partner in Driscoll-Wolf Marketing Research & Consulting, a Los Angeles company that conducts extensive research on telematics. “Even the idea of electronic discount coupons isn’t very appealing.”

Driscoll says if consumers receive some kind of incentive, such as price discounts on telematics subscriptions, they might allow themselves to be dinged by messages from a menu of retailers and other merchants they would pre-select.

Getting a lift

Some travel industry analysts believe that the expected greater willingness of business travelers to get to their destinations via ground transportation may provide a lift to telematics. In any event, they insist that the entire range of telematics services soon will catch on with consumers, just as e-commerce did.

“You can use a PDA (personal digital assistant) if you’re sitting at a bus stop or in someone’s waiting room. But if you’re drifting on I-405 in L.A., telematics becomes a great extra option.” says Mark Willingham, vice president of marketing for HeyAnita Inc. (heyanita.com), a Los Angeles voice-application technology company. “Then you’ve got a necessity for that kind of interface.”

One problem so far for more widespread adoption of telematics subscriptions is that OnStar, Lincoln’s RESCU system and others mainly have been aimed at luxury car buyers. That may be the wrong demographic target.

“The demographic most interested in telematics is people in their mid-30s who may be affluent but aren’t all buying the sorts of vehicles that telematics are available in right now,” says Umar Riaz, partner in the automotive-industry group

of consulting firm Accenture

(accenture.com). “Mass consumption will really be evident when telematics is offered to this more technologically savvy and adaptive group.”

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