Case: Hyundai and Kia in China
1. Evaluate and comment on the international corporate branding strategy of Hyundai and Kia.
As of December 1st 1998, Hyundai and Kia, as part of the Hyundai-Kia Automotive Group, have put a goal to be in the top of the automobile industry worldwide, not only in terms of being top sellers in the market but as quality vehicle brands. As part of this general vision, Hyundai and Kia initiated a Global Brand Management Strategy (GBMS) in which the companies took different approaches to changing their image to increase the value of the brands and the market share of the companies.
Hyundai’s strategy was to position itself as a brand of “refined and confident” automobiles. The slogan “Drive your way” suggests a creation of a sense of confidence in the customers perception of the brand. A brand that strives to project confidence must communicate in many ways such as demonstrating quality, safety, durability etc. According to the company’s annual report 2005, Sonata was ranked number one car in the US in 2004 and the company received top marks with respect to product quality attributes. These examples suggest that Hyundai’s corporate brand was well positioned as qualitative and refined.
On the other hand, Kia’s strategy was to position itself as an “exciting and enabling” automobile company. Kia’s key focus was innovation with the aim to always have the element of surprise up their sleeve. To achieve the goal of being perceived as an innovative company, Kia put many efforts to implement many novel features in their vehicles in fields such as equipping the cars with the latest technologies and dynamic styling. The slogans used by DYK for the Chinese market brands promoted a sense of innovation e.g. Cerato’s slogan “The Beginning of New Style and New Vision” or the name Optima which means “the finest and the optimal”. These slogans suggest that there was an effort by the company to influence people’s perception of the brand to the direction the company intended.
2. Evaluate the corporate branding strategy of BHMC and DYK in China. Recommend ways to further strengthen the brand power of Hyundai and Kia in China.
Since the First Automobile Industry Policy in 1994, the Chinese passenger car market product was flooded with international brand cars (through Joint Ventures between state-controlled companies and foreign firms) as well as locally developed cars. Under these conditions the market landscape “had no real dominant market leader” which made it difficult for automobile firms to focus on brand awareness. Even though the Chinese consumers showed high price sensitivity, according to the article, they were driven to buy a car mainly out of lifestyle choice, meaning more emphasis on “emotional and intangible attributes such as style and brand image”.
BHMC and DYK were positioned very differently in the way the consumers viewed the brands. BHMC was seen as “stylish and thoughtful”, slightly resembling the GBMS of the company (“refined” is also part of the brand’s image position according to the map), fitting the Chinese brand name (“modern and stylish”) and closely positioned with its competitors Exhibit 15. On the other hand, DYK is seen only as practical, which is far from what the company was aiming to be – “exciting and enabling”. A similar notion can be seen in the Funnel Analysis on the consumer purchase process, which clearly shows that BHMC is slightly below average, while DYK is very low compared to the average in terms of brand consideration. When it comes to brand consideration the competing brand on the brand image map are much higher than BHMC and DYK Exhibit 16. This evidence suggests that there is much to be done in terms of brand imaging and maybe even consider the option of repositioning of the brand, int the case of DYK, which is clearly not viewed by the buyers as they wish they would be.
According to the Funnel Analysis both companies fall dramatically in the stage of familiarity compared to the competing brands. More than half and around two thirds of the those aware of the two brands are not familiar with the brands BHMC and DYK respectively.
As the article suggests, the Chinese buyer is driven by intangible and emotional attributes. Hyundai’s perception by the Chinese buyer fits the overall GBMS of the company. BHMC could focus on strengthening this perception by putting more resources, on one hand, in sophisticated design models and on the other, investing in the company-client relationship post-purchase, emphasizing the idea behind the company’s logo (“workers” and “users” shaking hands, Figure 2).
To further strengthen the brand power of Hyundai, the company could focus on developing the product’s features that are the points of difference of the company finding ways to differentiate it from the competitors from the brand image map. In the developing social media digital era (early stages of it in 2006) word-to-mouth experience of the company’s products, through the digital web, could be valuable in a very competitive and fragmented market to promote the intended brand positioning.
The brand power of Kia in China is not high, and the Chinese buyers have a very different perception of what the brand stands for. To strengthen DYK’s position in the market the company needs to further invest in market research in order to establish the specific reasons why the company is seen as merely practical and not “exciting and enabling”, which are clearly not close perceptions. One way to do so could be designing an attribute-based map that could help identify physical features that are important to the buyer that could be points of parity or difference. Another way to deal with the situation, assuming that Kia has limited resources that it wants to invest in marketing, the company could accept their current brand power and focus on prices and deals in order to attract more customers.
According to the article “some competitors found that consumers showed higher preference for the international name to the Chinese name of the international partners”. Perhaps the name Kia, which means “Arise or come out of Asia” in Mandarin, imparts a more “local-Asian” connotation with the brand, unlike Hyundai which has a more “international” meaning (“modern and stylish”). This assumption could be validated using marketing tools such as surveys, focus groups, etc. and assuming it has some impact on the brands image, Kia could consider launching a Chinese-only sub-brand in the near future as possibility to establish more market share in China.
3. How effective, do you think, the brandings of NF Yu Xiang and Tianlima are? Should President Noh and President Lee change the branding? Why and How?
As mentioned in the previous section, some consumers prefer the international name of the car brand rather than the Chinese one. Both car brands were marketed by the companies with local Chinese branding. Rebranding the models using the same concepts as the companies did with their foreign models could have been helpful to regain market share.
NF Yu Xiang targets elite and highly educated people (Graceful, Premium), less concerned with the income of the target buyer. It is stated that President Noh was afraid that branding NF Yu Xiang as part of the international brand Sonata, as was done in other parts of the world would affect the position market of Sonata brand in China. One could argue that rebranding the NF Yu Xiang as the Sonata NF, as in other countries, could have a positive effect – Associating a high-end car brand NF Yu Xiang, which targets elite buyers, with an already successful Sonata.
Tianlima was already at a certain point a best seller among the DYK’s brands before Cerato overtook as the company’s top seller. The decline of the brand could have two possible solutions. One, if the brand keeps declining then the company could cease its production altogether and focusing their marketing and R;D effort on the Cerato segment C2 brand. Second, similar to BHMC’s effort to make their top-selling brands Sonata and Elantra to be designated “by Beijing municipal authorities to be the official taxi models”, DYK could try and promote Tianlima in the same manner e.g. as a car for the police force.
4. BHMC is going to launch a luxury sedan “Equus” in China in the E segment. Based on the background information provided in Table 1, analyze and recommend the branding strategies of Equus to President Noh.
The branding strategy of BHMC’s luxury sedan “Equus” should consider four main factors that affect brand choice among E segment consumers: Style/outlook, safety, brand image and overall quality Table 1. Price is not a concern in this segment’s buyers Table 1 but should be in the price range of the competitors in the segment. The company must identify the points of parity and difference for the Equus brand as compared to the main competitor brands in the segment. This will enable BHMC to know on what features to focus more and what the brand can truly deliver to the customer better than others. The company should look at the bundle of decision of the customer: operation factors (price, cost delivery etc.), product features/design (innovation, technology etc.) and customized needs and decide in which of the decisions the company could be better than its competitors.
Overall BHMC’s brand position matches the GBMS of the company (as mentioned in previous sections), maintaining the current brand image among the consumers will probably benefit the Equus brand image. The company should position the new brand in the same location on the image positioning map keeping the new brand under the perception of “refined, thoughtful and stylish”.
The company should also focus on developing a brand mantra which is important for developing a strong brand. President Noh could take into account the name of the brand that would be presented in the Chinese market. “Equus” means “horse” in Latin, a possible branding strategy could harness this meaning to advance a certain brand perception among the consumers whether it is in the logo design, advertising etc.