Wednesday, December 13

Hyundai Motors Part 1 – Hyundai Motors Success

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Factors that have contributed to Hyundai Motor’s success:

• Brand Equity:
The initial failure of the Excel propelled Hyundai Motor to improve their product quality and regain consumer confidence by “adding an unprecedented 10-year/100,000-mile powertrain warranty—assurance to buyers that the car wouldn’t fall apart on the turnpike while speeding along in the passing lane” (Gidman 2007).

Due to its efforts, Hyundai Motor was able to reposition itself as a producer of affordable cars (with quality), and consumers overall confidence in the Hyundai brand improved. As a result, Hyundai Motor has since been recognized as a producer of quality cars which are reliable and affordable; being ranked 72nd in the 2007 Best Global Brand survey. Bunkley (2008) quoted senior director of automotive testing at Consumer Reports, David Champion, that Hyundai has made “phenomenal progress” in the quality and reliability of its vehicles.

Being focused on the consumer, and improving in areas such as quality, durability, value and warranty programs have contributed to the success of Hyundai Motor’s brand equity. The company’s focus on affordability and practicality, unlike its competitors (e.g. BMW choosing to focus on technology), set it apart from its competitors and contributed to its success. (Vasilash 2006)

• Product Differentiation:
By improving (augmenting) its cars’ exterior design and engineering, while still maintaining its affordability, made it appealing to consumers and improved its brand image (from being the “Worst Car Ever Made”); giving it a competitive edge. For example, “Hyundai’s sleekly redesigned flagship” – the Sonata – was equipped with “six airbags, electronic stability control and a long list of standard equipment, all for less than $20,00″ (Muller & Meredith 2005). Hence, according to Muller & Meredith (2005), “Hyundai is now dictating trends that others must follow”: the company’s “success with cheap cars inspired General Motors to buy its own Korean company, Daewoo, to try to match Hyundai’s offerings”, and “Hyundai’s breakthrough ten-year, 100,000-mile warranty spawned extended warranty offers by Chrysler and Mitsubishi”.

Also, upgrading showrooms and operational standards (McVeigh & Feast 2006) helped to change (improve) consumers’ perception of the brand  from being the “Worst Car Ever Made” to a 72nd ranking in the 2007 Best Global Brand survey (Gidman 2007).

• Marketing Strategy:
Another factor that contributed to Hyundai Motor’s success was the company’s marketing strategy: after the Excel debacle, Hyundai Motor kept a low profile for a period and concentrated on building good quality cars before re-launching with assertive advertising. The assertive advertising helped Hyundai Motor to develop the brand element by capturing the brand’s intangible characteristics – durability and quality. For example, a “commercial for the Elantra showed a father negotiating a series of hair raising and frighteningly genuine stuns to the glee of his family in the back seat”: “up a ramp, through a ring of fire, over a trio of buses and into a handbrake turn. The commercial turned the traditionally mundane sedan into a hero.” (Finance Week 2005)

With such assertive advertising and slogans such as the Tucson’s “Pretty but tough”, Hyundai Motor’s brand image and consumer brand awareness improved, and sales soared; contributing to brand building (consumers’ perception of the brand). (Finance Week 2005)

• Change of Company Policy:
Hyundai Motor’s former policy of volume taking precedence over quality was soon replaced with building quality cars: the production of a car’s design would be stopped midway through its life cycle, or a car’s launch may even be delayed just so to resolve niggling issues (Muller & Meredith 2005). Top management was replaced with engineers (to get a more accurate perspective), and employees were encouraged to share their ideas for (generate) improvement with promised bonuses; boosting creativity (Muller & Meredith 2005). By doing so the company was even able to save cost. For example, as mentioned by Muller & Meredith (2005), after noticing that “the Sonata and the XG 350 sedans had differently shaped covers over their spare tires”, one employee managed to save the company $100,000 a year; by sharing the cover. Such measures helped the company to maintain their affordability, while not compromising on the durability and quality of their products.

Bunkley, N 2008, ‘Hyundai joins list of 10 top car picks’, New York Times; 29 Feb, p.2

‘dog to darling’, Finance Week 2005, Ad Review, 20 Apr, p.21

Miller, S 2008, ‘Q+A: Hyundai thinks its luxe genesis will be a revelation’, Brandweek, vol. 49, issue 5, Feb, p.12

Muller, J, & Meredith, R 2005, ‘Last laugh’, Forbes Global, vol. 8, issue 7, Feb

Gidman J, Hyundai – Hazard Lights,, October 22, 2007 issue

Vasilash, G S 2006, ‘Customers & competitors’, Automotive Design & Production, vol. 118, issue 8, Aug, p.64-66


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