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Case Study Summary: Local Motors

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Case Study Summary: Local Motors

In this module, you will become familiar with the course, your instructor, your classmates, and our learning environment. Then, you will learn how new digital tools are enabling customers to take a more active role in developing and branding the products they consume.

Marketing in a Digital World

University of Illinois at Urbana-Champaign

Course 1 of 7 in the Digital Marketing Specialization

This course examines how digital tools, such as the Internet, smartphones, and 3D printing, are revolutionizing the world of marketing by shifting the balance of power from firms to consumers. Marketing in a Digital World is one of the most popular courses on Coursera with over 150,000 Learners and is rated by Class Central as one of the Top 50 MOOCs of All Time (https://www.class-central.com/report/top-moocs/). This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

Skills You'll Learn

Marketing, Digital Marketing, Marketing Mix, Pricing Strategies

Taught By

Aric Rindfleisch
John M. Jones Professor of Marketing

Transcript

[ Music ]

>> Hi. Now that you've had a chance to think more deeply

about the Local Motors case, and respond to the three questions,

I'd like to bear out a few thoughts of my own.

And in particular I'll talk about four different ideas.

First of all, how do students react to this case?

Second, what are the concepts that we can apply to this case?

Third, what are some recent developments to Local Motors

and the Rally Fighter?

And finally, perhaps most importantly,

what are the lessons we can take away from this particular case?

Well, I've taught this case many times.

And typically the student reaction is quite mixed.

Most don't like the Rally Fighter at all.

They don't see its appeal.

They think it's too expensive.

They think it's ugly.

However a few students, a small minority, really love it.

They think it's an amazing car and an amazing concept.

So if you didn't like the Rally Fighter you're not alone.

Most people don't.

Second of all, concept application.

This case is an excellent example of the concept

of customer co-creation.

As you can see in this case, Local Motors appears

to employ multiple co-creation techniques.

For example, they used co-designing

to obtain the basic Rally Fighter design

by holding the design competition,

as well as its various accessories

such as the light bar you can add on top of the vehicle.

In addition, by [inaudible] sharing all of his designs,

components, and plans on his website,

it encourages tinkering.

So anyone in the world can download these plans

and build their own Rally Fighter

or take the basic Fighter and adapt it.

So, for example, I don't particularly

like the door handles.

So I could download the rest of the design and add

on my own door handles.

I could tinker with the car.

Finally, by requiring customers to actually come to the factor

and engage in the car building process,

they spend six days building their car,

Local Motors also appears to be engaging

in a form of submitting.

Although in this case the submissions come in the form

of actual physical labor which is somewhat unusual.

Now let's talk about some recent developments.

Well, as of early January 2015 Local Motors has sold less

than one hundred Rally Fighters.

Thus from a pure sales perspective this product has not

been successful.

However the Rally Fighter was quite successful in terms

of generating substantial awareness and attention

for Jay Rogers and Local Motors,

including several magazine articles

and television interviews and numerous YouTube videos as well.

In recent years Local Motors has somewhat given

up on the -- I'm sorry.

Somewhat given up on the Rally Fighter concept

as its sole source of revenue.

So it has an expanded product line.

And it's currently developing co-created bicycles

and motorcycles.

More broadly, Local Motors has realized

that their distinctive advantage is their worldwide community

of designers.

Local Motors at this point has thousands of designers

who are submitting ideas to this platform.

So now it is positioning itself not just as a manufacturer

of one vehicle, the Rally Fighter,

but more as a co-creation and design platform.

As a result, it has drawn attention

and has sponsored idea competitions for a number

of large firms and government agencies, including Reebok,

Domino's Pizza, and the U.S. Department of Defense.

Finally Local Motors is exploring new digital

manufacturing techniques

and recently printed the world's first 3D printed car during a

manufacturing expo held in Chicago.

We'll talk more about 3D printing a bit later

in this course.

Finally, lessons learned.

I think there are four key takeaways

in this particular case.

First of all, as you can see,

although there weren't many automobiles sold,

Local Motors has produced this car quite quickly

by using co-design to shorten the development cycle

by about one-fifth of how long it normally takes

to build a car.

So they created the design and manufactured the car in less

than two years which is much faster

than the typical automobile industry standard.

So this shows us

that traditional innovation practices are less than ideal.

Because they restrict the flow of ideas

from those outside the firm.

And that's what Local Motors did, open up this idea factory

and allowed thousands of submitters to give them ideas

for the basic design as well

as the accessories of the Rally Fighter.

Second of all, this pictured case shows us that just

about anything can be co-created.

We talked a bit earlier

about Trevis [assumed spelling] designing t-shirts.

Well, these are much more intensive, much more expensive,

much more larger scale, much more complicated than a t-shirt.

So in my view if you can co-create a car you can

co-create just about anything.

Thirdly this case shows us

that your contributors may not be your customers.

So, as we saw in this case,

the design for the Rally Fighter was submitted

by a fellow named Sangho Kim

who was an unemployed college student.

Somebody who clearly couldn't afford

to buy a $100,000 automobile, but provided tons of value

by giving them this great design.

Finally, and perhaps most importantly,

this case illustrates the concept

that the value chain needs to be expanded.

We typically think of marketing

as customers being the sole value provider in terms

of their past purchasing behavior

or future purchase promise.

This case shows that non customers,

folks who give us ideas, can be equally valuable

and can give us value in ways other

than just providing us money.

I look forward to hearing more

of your thoughts about this case.

I hope you enjoyed it.

And thanks for joining me.

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