Marketing Strategy of Hyundai Motor in America - Research Paper Example

?Memorandum April 9, Team-based Research Marketing Strategy memo Introduction This memorandum is to all employees of Hyundai Motor (America) to remind them of the illustrious goal set by the company for 2011. Having reached the pinnacle of achievement in the history of the company in 2010 (Over 3.6 million sales worldwide) (Carscoop.com, 2011), the company has set a target of 3.9 million worldwide sales. This memorandum is a review of the marketing strategy of the company in USA thus far and aims to explore the possibilities of maximizing the contribution of the US arm of Hyundai Motor towards this goal. Overview Hyundai Motor, a Korean company has established a prominent presence in the USA since its foray into the market in 1986. Today, over half of the 500,000 cars that are sold by Hyundai in USA each year are manufactured within the country itself. The company employs over 20,000 US citizens directly and generates indirect jobs for 6,000 more through its vendors. The company has a marked presence in the states of Alabama, Michigan and California, which house our manufacturing facility, engineering facility, proving grounds and design and research center respectively (Hyundai Motors, 2011). Hyundai’s association with USA goes deeper than just selling cars in the country. Since 1998, Hyundai Motor America, along with Hyundai dealers has been striving to help find a cure to childhood cancer by funding the CureSearch National Childhood Cancer Foundation. The company has hitherto raised $13 million for the cause. Marketing Brief Market Hyundai Motor America, being an automobile manufacturer, is obviously engaged in the automobile manufacturing market in USA. The company manufactures vehicles across various categories including, but not limited to compacts, family sedans, crossovers as well as premium vehicles. It also positions its products in various segments based on price starting from prices as low as $9,985 and going as high as $58,000. Main Competitors The competitive landscape of Hyundai Motor America comprises five main competitors viz. Ford Motor, General Motors, Honda, Nissan and Toyota. Hyundai Motors currently holds a 5.3% market share in the US market, but is seen to be steadily catching up to its competitors, recording its three best monthly sales volumes in the country after August 2010 as well as its best ever worldwide sales figure in the same year (PR Newswire). It is currently among the top four foreign car manufacturers in the country. However, the company is also threatened by the rapid progress of global rival Suzuki Motors as well as upcoming names such as Tata Motors and Fiat who are looking to gain a strong foothold in the US market after faring well in the Asian and European markets in identical vehicle segments. The Hyundai premium segment model ‘Genesis’ has also been touted as a competitor to luxury cars like the BMW and the Lexus. Main Customers The main customers of Hyundai Motor America comprise the end user of the automobiles manufactured by them. Like any other automobile manufacturer, Hyundai has an established distribution chain in the country to sell its products directly to the buyer. In other words, it is primarily a B2C company and focuses its marketing on the end consumer. All intermediaries in the sale of Hyundai products are either affiliated with or subsidiaries of the company. Core Competencies Hyundai Motor America, as well as its global contemporaries have a competitive advantage over their opponents through their constant innovations in new technology available at affordable costs to their customers. Features synonymous with any Hyundai car include power, handling, safety, comfort, stability, good customer service and economy in their cars. Every car rolled out by Hyundai motors in the US is expected to have adequate powers, safety measures, simple and responsive controls, comfortable interiors and provide good mileage for that segment. These features are the main reason that Hyundai’s customers opt for one of our products as opposed to those of the competition. Apparent marketing strategy Hyundai’s marketing strategy in the US concentrates on three main elements i.e. affordability, quality and after sales service. Ever since the company’s entry into the market, Hyundai has priced its products lower than its competition in order to woo buyers who could otherwise only afford second hand models. The company has also simultaneously concentrated on improving its quality and enticed customers to experience its quality by promising excellent service to its vehicles (such as the ’10 years or 100,000 miles’ warranty offer). However, having established itself in the market, Hyundai Motor is struggling to shake off the ‘cheap car’ image (US News 2006) that has come to be associated with it. Rather than being known as a manufacturer of cheap cars (despite having cars in the luxury and premium segment worth $58,000), Hyundai Motor America is now trying to appear as a customer friendly brand who takes care of their needs and understands their predicament. The recent offers by the company such as offering a year’s worth of fuel at $1.49 a gallon to consumers as well as allowing buyers to return cars and cancel car loans without affecting their credit ratings (when they lost their jobs) are some of the steps taken by Hyundai to achieve these goals. Long-term Environmental Factors Within the rapidly changing global scenario, Hyundai Motor America must closely monitor certain forces affecting its success in the market in the long term. These include the demographic, economic, social cultural, natural, technological and political legal environment in the country (Kotler 71) Demographic The company would do well to keep a close eye on the demographics of the target market. Unexpected changes in the demographic environment can often turn out to be a monkey wrench in the best laid plans. A rapid increase in population could change the needs of the market. Also, a change in the ethnicity of the population (as America is more of a salad bowl of many cultures) could also change the consumer’s needs. A change in the age group of the people with the most buying power would require the company to adapt their product offering to the new needs of the market. Economic Just as General Motors faced a crisis during the global economic downturn in 2008, Hyundai Motors too is at the mercy of the respective economic environments of its markets. An increase in the average income of the population could prompt the company to focus on its premium segment and a decrease could produce the opposite effect. A decrease in credit could decrease the buying power of the market. Also, heavy taxation on CBUs (Completely Built Units) might require the company to set up more production facilities in the country to minimize losses. Social Cultural Some social norms direct consumer behavior towards certain products and away from others. These are influenced by the consumer’s views of themselves, the views of others important to them, their organization, their peers and other societal groups. This could significantly alter the market in time. For example, if the general opinion were that sedans were a better symbol of success and that hatchbacks and compacts were down-market, the company would see a fall in the demand for compacts and hatchbacks and increase in demand for sedans. Natural The degradation of the natural environment is a serious issue to be considered in the long term. Factors such as pressure to decrease pollution, increased energy costs, depleting raw materials etc. might change the needs of the target market. Consumers might want vehicles running on hybrid fuels or electricity rather than conventional fuel or demand vehicles with better emission standards. It would be in the best interests of all involved to follow these trends. Also, the depletion of raw materials and increasing energy costs might prompt the company to look for better and more sustainable alternatives. Technological Due to the rapid pace of technological innovation in the world and especially in the US, it is important that any company keep a close eye on the needs of the consumer and the technological solution for the same. German auto manufacturer Volkswagen suffered a loss in demand for its ‘Jetta’ model due to the lack of simple features such as pen drive audio systems, back seat arm rests, rear A/C controls that were present in the models offered by competitors in the same segment. It is important that these trends be recognized and product and market offerings be changed accordingly. Scope for Improvement So that Hyundai may retain its competitive advantage and better consolidate its position in the US, it needs to evolve in a certain direction. Considering that today is a golden age to be a consumer, Hyundai needs to come up with an approach where the customer can be pampered without extra expenditure by the company. Offering greater personalization in models for customers, coming up with even more customer friendly deals and offers, creating a personal bond with the end consumer and establishing a relationship of trust to ensure customer loyalty are some of the aspects that Hyundai needs to work on in the near future. Simple gestures like a speedy 360 degree feedback loop with consumers could go a long way in this direction. It is also important for Hyundai to exceed the standard that is currently associated with it and instill trust in their consumers. They need to work on weaknesses such as distribution chains and accessibility of service centers and further improve on competitive advantages such as price and performance. Works Cited Kotler Philip and Keller, Kevin Lane. Marketing Management (12e).Pearson Prentice Hall, New Jersey. N.d. Print. 06 April, 2011. Hyundai Motor America. About Us. Nd. Web. 06 April, 2011. Carscoop Sources. Hyundai Sells 3.6 Million Vehicles in 2010, up 16.3% from 2009, Net Profits Soar 78%. Carscoop Online Newsletter. 27 January, 2011. Web. 06 April, 2011. PR Newswire. Hyundai Motor America Reports August Sales. United Business Media. N.d. Web. 06 April, 2011. Newman Rick. General Motors: The next Hyundai? US News. 09 June, 2006. Web. 06 April, 2011. Read More