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undai Sales Strategy

Sales Management

Sales Strategy Of Hyundai

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Subash S
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As American automakers struggle for survival, South Koreas Hyundai Motor appears to
be gaining on the pack with bold marketing and broad-based initiatives to improve
quality. The company made a splash earlier this year when it unveiled its Hyundai
Assurance program allowing customers to return a car if they lost a job. Competing
automakers and other types of businesses soon followed with similar promises.
Years earlier, however, Hyundai had already begun to invest in new models and quality
programs that have put the company on solid footing to profit from the current chaos in
the global auto industry, according to Wharton faculty.
Theres a sense that what Hyundai is doing on many fronts is working in terms of
actually gaining some advantage during the crisis, says Wharton management
professor John Paul MacDuffie, who specializes in the automotive industry and is codirector of the International Motor Vehicle Program.
In 2008 a brutal year for the auto business Hyundais global unit sales rose 2%,
lifting revenues by 5%. In the first three months of this year, the companys global
market share rose to 4.7%, compared to 4% a year earlier.
MacDuffie says Hyundai first made a name for itself in the United States in the late
1980s when it exported the low-cost Excel to the American market. The car was popular
at first, but soon earned a reputation for developing rust and other quality problems.
Sales dropped and it left reputational damage in consumers minds, according to
MacDuffie. In the 1990s, Hyundai attempted to introduce a range of high-priced
vehicles into the U.S. market, but MacDuffie says the company was haunted by its
reputation: Quality has always been Hyundais Achilles heel in the U.S.
It was another economic crisis the 1997 Asian financial collapse that sowed the
seeds for Hyundais recent success, according to MacDuffie. He notes that during that
global economic slump, the South Korean currency fell sharply. As a result, Hyundais

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competitor Daewoo went into bankruptcy and Hyundai was able to acquire another
Korean automaker, Kia Motors. Surviving consolidation in its home market, Hyundai
emerged from the crisis with new strength to address its problems.
Risky Moves
Beginning in 2001, MacDuffie says, Hyundai launched a major push to upgrade quality
with a daily focus on improvement through new processes at its manufacturing plants,
and from better design and engineering. At the same time, to help overcome its
reputation for poor quality, the company announced a 10-year, 100,000-mile warranty.
The Hyundai program was far more comforting than the industrys standard three-year,
30,000-mile warranty, and essentially guaranteed the car for its entire expected
working life.
It was risky, but a powerful impetus to improve quality, says MacDuffie. They pulled
it off and it helped them make a major jump forward. This year, Hyundais Genesis was
named 2009 Car of the Year by independent automotive journalists at the North
American International Auto Show in Detroit.
Meanwhile, as it was working to improve quality, the company also was expanding in
Europe, the United States and in developing markets. MacDuffie notes that the Hyundai
Sonata was selected to be the official taxicab during the Beijing Olympics and the
company has been more successful than some of its Japanese competitors in gaining
market share in India and China. Thats another risky, big bet that has paid off well for
them, he says.
Hyundai Assurance program
In January, Hyundai grabbed attention in the United States as consumers were reeling
from the collapse in housing and stock market prices and growing fears of
unemployment, by offering to take back a car that is financed or leased by a worker who
subsequently loses a job. When it was introduced, the Hyundai Assurance program was

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seen as more than just a marketing campaign, but also as psychological affirmation that
the economy was not going to collapse entirely.
What they are doing is empathizing with the plight of people who are struggling, says
Wharton marketing professor David J. Reibstein. He observes that the Assurance
program is similar to the warranty that Hyundai used to build confidence among
consumers. There might be hesitancy to buy because people dont know if they will be
employed, but this provides the safety net which allows them to say, I can still afford to
be in the market. Clearly, the market needed some stimulation and Hyundai was able to
provide that stimulation.
Analysts proclaimed the program a success when Hyundai reported U.S. sales were up
14% in January compared to the same month a year earlier, while the entire U.S. auto
market fell 37%.
Reibstein says the offer was a groundbreaking concept, which was later adopted by other
companies. The idea might be used successfully in other industries to inspire confidence
among consumers, he adds. Big-ticket durables would likely benefit the most, although
he says the idea might also succeed in real estate. Pfizer has a similar program assuring
the users of its products that they will be able to continue to receive medication if they
lose their jobs. It wont work with every product, explains Reibstein. Its got to be a
product with greater risk. What this strategy does is reduce the risk to the customer.
John Zhang, another Wharton marketing professor, agrees the program was a good
move by Hyundai. He adds that the companys U.S. customers, who tend to buy cars at
lower price points, may be more affected by the recession than other carmakers
customers. Economic uncertainty and layoff threats will certainly make customers
think twice before they purchase a new car, he says. Hyundais offer will convince
those on the fence to jump over now.

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In addition, the program is likely to generate strong goodwill toward the company.
Hyundai scores a huge publicity point, by being compassionate towards [those who
are] down and beaten, according to Zhang.
In another surprising marketing move, the company last month offered to send buyers
of some Hyundai models up to $333 a month for six months. The catch: The deal applies
only to cars on which Hyundai is offering rebates. Buyers may opt for either the rebate
or the monthly check (not both), and the value of the two offers is about equal. But such
programs tend to generate consumer buzz.
Wharton management professor Lawrence G. Hrebiniak says Hyundais success is the
result of a cohesive strategy clearly designed to differentiate the firm from its
competitors, combined with a willingness to make substantial investments to carry out
the plan.
Hrebiniak adds that the company is now taking a lead in endorsing new, tougher
environmental standards for the industry: It has promised to meet new federal energy
standards requiring that cars get 35 miles per gallon of gasoline five years ahead of the
2020 deadline. Something like that is just one more part of differentiation strategy to
say, Were cool. Were high quality people,' says Hrebiniak. Its all on TV. They won
Car of the Year. They are the first mover in helping people in trouble get over the hump
and now they are a leader when it comes to the environment.
Hyundai is not afraid to spend money to reap benefits down the line, Hrebiniak notes.
Heres a company that no one really knew about other than it was a South Korean
company that made cheap cars. Theyre biting the bullet and investing a lot in research
and development and advertising while also improving quality, and letting people know
that they will be there for them if they need help.
The Chairman: A Revered Convict

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MacDuffie says the Hyundais ability to take bold actions may lie in its structure as a
family-run company that is dominated by its chairman, Chung Mong-koo. Hyundai
Corp., the automakers former parent company, was founded by Chungs father in 1947.
By the time the automotive business, Hyundai Motor Co., was founded in 1967, the
corporation had grown into achaebol or jaebeol, a conglomerate that benefits from
government ties. Chung is viewed as all powerful, and for him to drive top-down
initiatives around quality would no doubt get the attention and responsiveness of
everybody in the company, says MacDuffie. Even after he was arrested in a corruption
scandal in 2006, Chung remained in control of the company, according to press reports,
using a telephone from his jail cell. He was serving a three-year suspended sentence
when he was pardoned by South Koreas president, Lee Myung-ba, in 2008.
Within the company, he remained admired and revered, says MacDuffie. In the larger
population, my sense is that many admire these larger-than-life figures who have driven
so much of Koreas economic growth, and some feel the government is overzealous in
prosecuting them.
He adds that Hyundais governance structure is geared toward innovation and
improvement, even including members of its parts supply organization, known as
Hyundai Mobius, in the highest levels of the corporation. Many of Hyundais top leaders
have come through the supplier network. It seems clear that in an era when a lot more
design is done by suppliers, the very close relationship between Mobius and Hyundai
Motor has helped Hyundai to have effective designs and good quality, says MacDuffie.
MacDuffie points out that Hyundais attitude was captured in a speech delivered by
John Krafcik, CEO of Hyundai Motor America, at the Chicago Auto Show in February.
Krafcik called out his peers for their grudging response to environmental and safety
concerns, corrupt business practices, outlandish compensation and long-time reliance
on government assistance. He compared the experience of a customer entering an auto
showroom to going to the dentist.
While no other industrial sector has a greater impact on the health of our economy,
there is no other business with a bigger perception problem. Lets face it our

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reputation as an industry is horrible, Krafcik said. In the U.S., we are viewed for the
most part as a slow, dim-witted industry that is typically unresponsive to consumer and
environmental needs. If that werent bad enough, our executives are criticized for lavish
compensation, abundant perks and unnecessary entitlements.
We need to work more consistently as an industry to change those negative
perceptions, he continued. By taking personal responsibility for our shortcomings,
rather than ignoring them, we gain back our credibility.
Hrebiniak notes that it is hard to say whether Hyundais current strategy will be
profitable in the long run. They may be spending more than they are reaping now, but
that could be part of the strategy to incur costs and hope it all comes together not only
in sales and market share, but also in terms of profitability, he says. They are spending
money to make money. I give them credit.
Zhang agrees that Hyundai is steadily gaining approval in markets around the world.
This is an unassuming, late-coming company that is consciously trying harder to please
customers than anyone else in the marketplace, he says. When you try harder, sooner
or later, you get noticed. Hyundai will soon, if not already, become a force to be
reckoned with for the U.S. and Japanese manufacturers because it gives the most bang

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for customers money.

The second generation cars:

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In recent months, Hyundai has hired field managers to oversee sales, marketing and
retail strategies for the Genesis sedan, Genesis Coupe and $60,000-plus Equus sedan.
Each of Hyundai's five regions will have a premium product operations manager
reporting to a senior group manager based at Hyundai Motor America headquarters in
Southern California.
The next generation of Hyundai luxury cars arrives started in 2014 with the redesigned
Genesis sedan. The Genesis debuted in 2008, the Genesis Coupe in 2009 and the Equus
in 2011.
Sales of the three vehicles totaled 37,945 last year, up about 5 percent from 2011.
The premium group's first task is to identify premium best practices used by the
approximately 320 dealerships out of Hyundai's 800 that are authorized to sell the
Equus. Hyundai Motor America CEO John Krafcik said the group will help dealers
adopt those practices and develop new premium sales, marketing and customer service
ideas.
Krafcik said the new structure is a significant change for Hyundai. Unlike many other
automakers, Hyundai has not assigned employees from marketing, sales, public
relations or other departments to work on specific vehicle lines, other than a handful of
product planners, he said.
"The realization was that these are different products and different demographics,"
Krafcik said. "The thought was that we could do even better in focusing on premium and
taking things to the next level with some focused people in the field."
He said the new premium product group should not be interpreted as a step toward
launching a new luxury brand. "We have the same diabolical plan that we've always
had," Krafcik said. "We don't want isolated islands of retail excellence, like Lexus. We
want all of our premium knowledge to filter into all of our products."

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Social media Campaign in India:
Here is what Mr. Sanjay Gupta, Sr. General Manager & Group Head Marketing,
Hyundai Motor India Ltd says about Social media campaign in Hyundai India.
What are the communication objectives of Hyundai & how does social media
marketing help in achieving these objectives?
As a key player in the countrys automobile sector, & with growing competition, our key
focus is always to reach out to our market as much as possible & listen to them as much
as possible. Social media needless to say is a key tool for this two way communication.
What has the impact of social media marketing for your brand in India been so far?
How has the social space evolved since the launch of Hyundai in India?
Social media has been a great way to connect and engage with our fans to build a long
term relation with them. They are the first ones to give us feedback on many things
including brands, service and communication. We value that and have benefited from
them. While we started our presence in the social space through Facebook, we have
expanded our presence across all popular social spaces today. Our fan base has grown
rapidly. We really work hard to sustain a good association with our fans.
What are the key tenets of your social media policy for the company? Could you please
outline it for us?
The key tenets of our social media policy hinge on Communication, Engagement and
building long term association with our fans across multiple platforms in innovative
ways and manner which is in sync with our brand values.
From the entire marketing budget, in terms of percentage how much is allocated to
social media marketing every year?

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Our investments in the social media space are based on objectives and tasks of the
brands. The budget is never allowed to be a constraint and that as a percentage of the
overall marketing budget is a derivative than a starting point.
Does an external agency manage the social media communication for your brand? If
yes, how does it tie in with your overall communication strategy?
We choose to call our associates as partners, and not as external agencies. We have been
working with Everymedia for over 3 years now. The synergy of our social media
initiatives are always in sync with the overall brand communication plans. Innocean,
our marketing communications group ensures these synergies by collaborating with all
stake holders and integrates plans to be taken forward in the social space in a seamless
manner.
How do you plan & execute your content strategy? Give us a day in the life of your
social media manager right from conceptualization of a campaign to its execution.
Our content strategy heavily rides on our products & related offerings. We start any
campaign working backwards, as in we first set up a clear objective & set of measurable
that need to be achieved & then start working on that ground up. Post execution these
outcomes are measured &learnings derived.
What are some of the most important social media platforms you think an automobile
brand must be present on, to target & engage with its customers?
The social media paradigm is so dynamic today that anything is too little. Buyers today
love the idea of interacting with brands at different levels on different platforms. We
believe if your audience is showing you signs that you should be on a particular platform
then you should be there.

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What role does your social presence play in customer relationship management? Since
it is easy to put up a tweet about a dissatisfying experience users have had with a
product or a service, how fast do you reach out to a customer & respond?
Our social presence works wonders for our CRM. We focus on the relationship part
of the CRM. Social provides us with a very vibrant & economical platform to listen to
our customers. We have a set of guidelines to respond to complaints & queries on
platforms, & follow them religiously. Our basic response time is 1hr.
What tools do you use to analyse the feedback you get about your product & customer
service via social media? Do you use any tool to measure the efficacy of your social
media campaigns?
We go by the basics & use the inbuilt analytical tools across platforms.
Tell us something about your recent successful social media campaign & how did you
track its effectiveness?
Our latest successful social campaign was the activity we did for the launch of our
newest offering the Elitei20. Our plan was to use the Social platforms to garner
maximum coverage for the product & develop a cult following for the same. We did it by
Live streaming the launch with a buzz going a few days earlier to create the anticipation
We followed it up with prompt content of the cars exclusiveness highlighting features
that make the car stand apart.
We kept the buzz on with 3 back to back contests on platforms, thus constantly engaging
the audience
We also linked offline activities, online thus maintaining the buzz over all.

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Our main objective during this process was to garner maximum engagement & on the
platforms, being a consumer brand our main aim was to get people talking about the
car. We tracked the efficiency on the basis of people communicating about the various
activities be it the launch streaming or the TVC launch or contests etc. Our goal was to
get people talking & we did it.
Who is your potential customer target group and how do you reach out to them via
social media?
With change in the demographics in the country over the past 10 years the average car
buyer todays age has dropped drastically. With a plethora of opportunities for
youngsters today & the general change in attitude to life & access to finance, the
automobile industry has found an entirely new bracket of buyers ranging from the age
group of approximately 25 to 32.
This customer space is the most active on Social Media & relies on social media heavily
for purchase decisions. We reach out to our buyers & fans through very interactive
content. This is broken down into informative content, promotional content & engaging
content like contests etc. This helps us gauge the general pulse of our social audience.
How do you measure your social media ROI?
We measure the social media ROI at mainly two levels. Firstly we look at the basics in
terms of each platform in terms of what it has to offer, for eg. Likes, Followers etc. Once
these basics are in place the next level is to use the platform for deep day to day
communication with our customers & Fans who are not customers yet. In terms of ROI
we look at the Social Presence to add to the overall brand equity & to Hyundais brand
value in the customers mind space, hence translating into the overall Hyundai
Experience in terms of sale & after sale experience.
The Modern Premium Tag:

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Hyundais strategy of offering value proposition under Modern Premium tag in its
models seems to be paying dividends.
Under its new fluidic design theme and modern features tag, the company has been
rolling out variants packed with premium features. Two of its recent models compact
sedan Xcent, launched in March this year, and premium compact car Grand i10, rolled
out in September 2013 - have been fetching good volumes despite depressing market
conditions. Aided by strong response, Xcent, a compact sedan which carries a starting
price of about Rs. 4.7 lakh, has become the4th largest selling car in India, pushing
Marutis Wagon-R to the 5th position. For long, Marutis models such as Alto, Dzire,
Swift and Wagon-R were occupying the top four positions in car sales. Hyundais Xcent
sold 15,584 units in May when compared with 11,757 units of Wagon-R. Xcent is
reported to have sold over 32,000 units since its launch.
Also, Hyundai Grandi10, another successful model with modern premium positioning,
occupied the 6th position in May car sales table. It has been sustaining a monthly sales
rate of about 9,000 units.

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