Hyundai Needs to Create a new Brand for its High-End Car

The votes from Consumer Reports and others are in. Hyundai has introduced a new high-end car that is the equal of BMW and Mercedes. The problem, I believe, is that they intend to sell it as a Hyundai.

Hyundai is a successful South Korean car company. It recently bought KIA, another Korean company. The plan, it seems, is to position KIA at the lower price end and Hyndai at the higher end. That would be find if these were new cars in the market. The problem is that both cars--Hyundai more than KIA--have been well positioned as inexpensive, quality cars. If one draws a perceptual map for the auto industry with two axes: price and quality, Hyundai would be in the prime position of low price, high quality car. It is lower priced than Toyota or Honda or Chevy or Subaru. It has done an excellent job in this category. In fact, if one were to ask consumers to name the top low priced car with good quality, Hyndai would likely be top-of-mind for many.

It is a given that it is easier to build a brand image than to change one. Once attributes and associations start to crystalize, they are more difficult to change. Hyndai has been on the market for some time and has done a great job in branding its cars. Now, it wants to change and reposition what a Hyundai means.

Toyota faced this issue and decided that the parameters of attributes and associations of the Toyota brand would not extend to a high-priced, luxury car. It introduced Lexus. Honda faced the same challenge and introduced Acura. I am a bit mystified that Hyundai believes that it can reposition their car and get people to spend $50,000 plus. Think about the scenario. You drive home in your new luxury Hyundai and park it in the driveway. Your neighbor comes over and admires it and asks what it cost--$55,000 you say. He responds: "for a Hyndai? are you crazy, you could have bought a Lexus or BMW or Mercedes for that money". And the post-purchase dissonance would begin. I don't think enough people will get to that point. They will think about their neighbors, their egos, their resale values, etc.

The old consumer purchase steps we used to think about (need, alternatives, evaluation, purchase, post-purchase) was conceived to parallel the sales funnel that ran from awareness to familiarity to favorability to consideration to purchase. We now know that with the proliferation of alternatives in the market and all of the media and social media exposure, most consumers begin to eliminate brands before they even begin shopping; they focus on a few brands. We are not living in a world of mass advertising anymore. Hyundai has more avenues to reposition itself within, but a more fragmented market in which to do so. It will take the company a lot more time, money and other resources to reposition Hyundai than it would to introduce a new brand of car with a shadow endorsement from Hyundai.