Auto finance companies need to ‘aim for the blue ocean’ when it comes to establishing their future strategy, to develop uncontested market space.
Instead of fighting an increasingly costly battle for market share in current markets, more effort should be focused on identifying and servicing new business areas.
Tim Porter, managing director of Lex Autolease, the UK’s biggest vehicle leasing company, said the industry could learn from leading professors at INSEAD business school.
He made the comments during a presentation to delegates at the International Auto Finance Network Conference, in London.
You can watch key points from his presentation below in a video presentation provided courtesy of White Clarke Group.
INSEAD professors W. Chan Kim and Renée Mauborgne are the creators of the Blue Ocean Strategy, which is based on a global business study that defined a Red Ocean - where ‘a lot of blood is spilt’ as companies compete for existing business, and a Blue Ocean of untapped markets where competition is less fierce.
Their study of 30 industries shows how companies that can develop ‘blue oceans’ reap the benefits for 10-15 years because they are hard for rivals to copy. Their book on Blue Ocean Strategy is a 3.6 million copy global best-seller.
To benefit, Porter argued the industry needs to adapt in a similar fashion and simplify its proposition and maximise the use of technology to benefit customers.
Porter said: “I am already seeing simplification and collaboration in practice in the sector as part of reinventing the leasing proposition by progressive companies who have made a choice not to compete if they don’t have to.”