GM has been the subject of many business school cases focused on their inability to recognize market changes and adapt their company to meet the challenge of both a new consumer and foreign imports. But, it seems that the new CEO, Ed Whitacre thinks the problems can be fixed with a new marketing chief. He removed chief marketing officer Susan Docherty, who had been put in the position only 5-months ago, and hired Joel Ewanick, who lead a very clever marketing campaign for Hyundai.
GM has been increasing sales but losing market share and Whitacre seems intend to build share back for the company. A great goal. However, I am not sure that I have found anyone who has backed off of buying a GM car because someone else had a more clever ad campaign. Whitacre, who grew up in the telecom industry, seems to think that people choose cars the way they choose wireless plans. This is a guy who continues to live in Texas and has little or no knowledge or understanding of GM or the car industry. He is impatient. Impatience with a company like GM could be expected, but change at GM is hard--it's a huge "battleship" that has been built and reinforced over generations. Change is difficult.
One of the things we always warn students and clients is to not look at other companies and try to imitate their marketing efforts. Imitation is not a strategy. Differentiation is strategy. Ewanick did wonders with Hyundai, but he had a lot to work with. He will have far less to work with at GM. I don't know Docherty and do not know what she did or did not do to warrant this removal, but can you really expect marketing to help sell a car that few people really believe in?
Marketing and branding can do a lot, but the prerequisite is a good product with a value proposition that resonates with the needs and interests of customers. GM does not measure up on either of these counts. Good luck to the new head of marketing. My advice while working for Whitacre--rent, don't buy.
Showing posts with label Hyundai. Show all posts
Showing posts with label Hyundai. Show all posts
Thursday, May 6, 2010
Friday, April 30, 2010
Is a Hyundai Really Comparable to a BMW or Mercedes?
Hyundai has a new car that many analysts believe is equal to BMW, Mercedes and Lexus. It is a real tribute to Hyundai that they have been able to develop such a high quality car.
Hyundai has bought KIA, its Korean rival and seems intent on making KIA the low-price car and Hyundai the higher priced car. Problem is, Hyundai has earned a reputation as a low priced, decent quality car. They have been on the market long enough that this reputation has become crystalized in people's minds. In fact, Hyundai owned the low price-quality category.
To take a car from that category and now convince us that it should be considered a highly differentiated, high price car is a big stretch. Toyota faced this challenge and decided to create Lexus since the Toyota brand could not stretch enough to be considered in the high priced, luxury category. Honda created the Acura and Nissan created the Infiniti for that same reason. Audi, BMW, Mercedes have all expanded their lines downward.
Hyundai is taking a real gamble by trying to stretch so far. It would be far better, in my opinion, for them to create a new brand for the luxury market. However, if they are taking a long-term view (up to 5-years) perhaps they are content to slowly reposition themselves. It seems to be an expensive proposition that could be leap-froged by creating a new brand to go along with the new, highly refined car they have developed.
Hyundai has bought KIA, its Korean rival and seems intent on making KIA the low-price car and Hyundai the higher priced car. Problem is, Hyundai has earned a reputation as a low priced, decent quality car. They have been on the market long enough that this reputation has become crystalized in people's minds. In fact, Hyundai owned the low price-quality category.
To take a car from that category and now convince us that it should be considered a highly differentiated, high price car is a big stretch. Toyota faced this challenge and decided to create Lexus since the Toyota brand could not stretch enough to be considered in the high priced, luxury category. Honda created the Acura and Nissan created the Infiniti for that same reason. Audi, BMW, Mercedes have all expanded their lines downward.
Hyundai is taking a real gamble by trying to stretch so far. It would be far better, in my opinion, for them to create a new brand for the luxury market. However, if they are taking a long-term view (up to 5-years) perhaps they are content to slowly reposition themselves. It seems to be an expensive proposition that could be leap-froged by creating a new brand to go along with the new, highly refined car they have developed.
Sunday, March 14, 2010
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.
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.
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