Global Marketing Strategies for Hyundai Motor Company - Case Study Example

GLOBAL MARKETING PLAN Name: Institution: Date: Introduction The Hyundai Motor Company has numerous opportunities in both the Indian and United States markets. The company should focus on taking advantage of these opportunities to curve a niche in the motor industry and become the preferred motor company in its various target markets. It is also very important that the company develops a marketing strategy that will present it as the preferred motor company in its target market. To meet these goals, the following Global Marketing Plan has been prepared. The plan seeks to exploit the opportunity identified in the earlier developed “Situation and Opportunity Analysis. According to the analysis, various opportunities were identified, which will serve as the marketing objectives of this plan. A thorough analysis of the Indian and the United States market revealed that in America, a major opportunity available for Hyundai is that the car maker’s products are still viewed as affordable and fuel-efficient. Another major opportunity identified was the emerging markets in Africa, whereby there are markets such as South Africa, Kenya, Egypt, Nigeria, Botswana and Angola which are yet to be fully exploited. It was established that Hyundai should develop an elaborate marketing strategy for these developing markets so that it can penetrate the automobile market that is currently dominated by Japanese carmakers. The marketing objectives of Hyundai Motor Company, therefore, are to present its cars as affordable and fuel efficient, especially to the American and Indian buyers and secondly to focus on emerging markets in Africa. Target Markets To meet its marketing objectives, Hyundai Motor Company should target its marketing energies on two categories of target markets. The first category is in the United States and is the middle-income and low-income customer, who seeks to purchase affordable and fuel efficient cars. The other category is in emerging markets, whereby the company should also invest in targeting its products and services for the consumers found in Africa and other emerging markets. The following analysis focuses on various aspects associated with these target markets, including aspects such as culture, demographics, consumer behaviours and industry structure. Culture In the United States, the target market for Hyundai is the consumer looking for an affordable and fuel efficient car. To succeed in its marketing ventures, Hyundai should firstly focus on the culture of the American people, especially with regard to buying cars. It is very important that Hyundai understand the innate differences between the American culture and other cultures with regard to buying cars. In America, cars are considered symbols of freedom. This is especially the case in young generations (Boxwell, 2010, p. 21). Youth culture is considered a car culture, whereby in many families in America, for example, the birthday present given to a young person when they reach eighteen years of age is a car. According to a recent study on the culture of buying cars and the present-day trend, however, this culture was established to have been affected greatly by the new emerging trend of owning smart phones (Weismann, 2012, p. 1- 11). A recent study showed that a considerable number of young people are no longer interested in owning cars, rather they are now embracing the current trend of smart phones. This study established that many companies in the auto industry are concerned that the culture of buying cars is not as popular any more. The study established that generation Y is willing to give up a car as long as they have the current smart phone models. In the long term, this study established that Americans will purchase only 15 million cars and trucks each year, as opposed to about 17 million. When compared with the past, young people were found to be buying fewer cars in modern times, something that was attributed to the recent recession and the slow recovery of the economy since the 2008 and 2009 economic recession (Weismann, p. 1-11). The fact that there is a change in culture, whereby more and younger people are embracing the internet and technology and in the end forgetting about cars is an important threat that Hyundai should take into account. However, considering that one of the company’s marketing objectives is focused towards presenting itself to the American buyer as the affordable and fuel efficient car, this means that Hyundai has an opportunity to explore in the American market. One of the reasons why cars are no longer the centre hold of the young American was identified to be the slow recovering economy, which means that fewer parents have disposable income with which to buy cars. This, nonetheless, presents an opportunity to Hyundai as the affordable carmaker, whereby parents will have the alternative of buying an affordable and fuel-efficient car. The culture of emerging markets with regard to the purchase and preference of cars is also a very important aspect to take into consideration. A successful marketing strategy to emerging markets is dependent upon understanding the culture of consumers in these markets. The culture of consumers in the African continent and other related emerging markets is unlike that of the American market. In the United States, because of its developed status and the fact that many families consider a car a necessity, this is not the same in Africa, whereby cars are considered by the majority of people to be a form of luxury (Alemayehu, 2000, p. 362). Hyundai should, therefore, be very creative when developing their marketing message, to avoid being irrelevant to the African target market. They can achieve their marketing objectives in Africa by marketing their cars as a necessity, rather than a luxury. Demographics and Consumer behaviour The age, education, income level, gender and social status are important consumer demographics that have been found to have a significant effect on different aspects of consumer behaviour, for example consumer satisfaction, decision making, online shopping, customer retention and online information search. With regard to the subject of age, researchers have established that the older generation were not as loyal as consumers of the middle age bracket. This is because the older generation have more time to shop in different stores (Zhang, 2008, p. 40). In the automotive industry, a study established that older customers have a higher likelihood of staying with one provider compared to the younger customers. Other studies have established that older customers are more likely to stay loyal to a company because of the following mechanisms: cognitive decline, biological aging, socio-emotional selectivity, and decisive aversion. These findings are very important factors that Hyundai should take into consideration. In the United States market as well as in emerging markets, the company should target its marketing message focused on the older customers. This is because the older generation are likely to remain loyal to the company. In addition, the older generation are also more profitable to focus on because they have more disposable income to spend compared to the young generations (Zhang, p. 40). Service usage is another very important factor that affects the customer behaviour. According to researchers, if consumers used a service often, the continued exposure to good service can continuously result to higher loyalty and satisfaction. However, other research has suggested that as the use of services increases, consumers start treating the benefits of the services given as a given, therefore expecting more and more benefits from the provider of the service (Zhang, 2008, p. 40). Such raised expectations can lead to lower satisfaction in the long run and even reduced loyalty. Nonetheless, more and more researchers have established that service usage is bound to result to greater satisfaction of consumers as well as longer and longer customer relationships. Hyundai should invest in this information and ensure that their marketing message is targeted to meet the needs of customers to avoid lower satisfaction (Zhang, 2008, p. 42). Industry structure Scholar Helmut Becker analyses the findings of researchers on the automotive industry and different studies that seek to establish significant structural changes in the automotive industry. According to these researchers, the automotive industry from different parts of the world is currently facing a sensitive process of selection and concentration. This begins with the OEMs and extends to various types of supply levels. Other findings with regard to the structure of the automotive industry that Hyundai should take into consideration are that mass brands are expected to reduce their value creation process compared to premium brands. Furthermore, close networks of suppliers and manufacturers are expected to be formed in the near future. The implications of these findings are that Hyundai should structure its marketing so as to bind the appropriate partners to itself early enough. It is also important that the company have clear common goals, expand and identify promising marketing models in the network early enough, to obtain competitive benefits over its rivals (Becker, 2006, p. 133). Marketing Strategy In order for Hyundai to enhance its competitive edge in the market, the company determine the strategy that is best for the company considering its objectives and available resources. It is also recommended that the company should consider strengths and weaknesses of the company, together with opportunities and threats. To enhance the company’s aptitude, the following marketing strategy is developed. This marketing strategy seeks to develop elaborate marketing mixes for various target markets of the company. This marketing mix is made up of four major elements to examine or execute for marketing campaigns. The main objective of the marketing team is to ensure that the marketing mix is optimized. The company’s marketers may enhance their marketing value and outcomes by implementing the correct combination of the four P’s. Distinct alternations made to this marketing mix are examined as tactical changes, at the same time rendering significant changes to it can be a strategic consideration. These four P’s of marketing are as following: product, price, placement and promotion (Lamb, Hair, & McDaniel, 2011, p. 47). The marketing mix elements of Hyundai Motor Company fulfil the requirement and meet its objectives if the organization targets the most of the important four P’s. The marketing team can easily understand and achieve success to determine a bright picture with regard to the customer loyalty of the Hyundai customer since these four elements are the primary fundamentals to any successful firm’s marketing strategy. Marketing Mix : The Four P’s Product Hyundai has achieved success in terms of success since the brand was established in 1967. Considering that the company is recognized as the fourth largest manufacturer of automobiles in the world (Schmitt, 2011, p. 1-3), this is a strength that the company should capitalize on even as it seeks to expand to new emerging markets and focus on the U.S. car markets. The three major products sold by Hyundai are automobiles, commercial vehicles and engines. One of the most successful car brands of the company is the Hyundai Elantra, which recently named the North American Car of the Year during the North American International Auto Show (Snavely, 2012, p. 4). The car is a compact car of the company and was launched in 1990 and is currently in its fifth generation. This generation is also codenamed the MD. The model features a 1.6 litre direct-injection engine that produces a torque of 103 kW and 167 Nm. The model’s design advances the company’s fluidic sculpture styling theme which was first experienced in the 2011 Sonata. This new model, however, went on sale in South Korea in August 2010. Worth noting about this new model’s engine is that it has been optimized by Hyundai engineers for efficiency. The Elantra is certainly the car the company should focus upon when marketing to the target market of the United States, as it has been praised for its low fuel usage and affordability as well. Also worth noting is that the Elantra is currently the South African car of the year, after recently winning the award in 2012 (Dean, 2012, p. 1- 4). This crowning was a surprise to car manufacturers as it was the first time a Korean car maker was awarded in the history of the award in South Africa. The Hyundai Elantra is therefore not just the car the company should market in the U.S. market but also in its emerging markets in Africa. The fact that the Elantra is the car of choice of many South Africans means that the company can easily capitalize on this opportunity and market it to the rest of African countries as the car of choice to other African nations. Further, it is recommended that the company should sell different types of cars, from cars suitable for use in the city, to SUVs, to cars suitable to be used in emerging markets such as Africa. The company should be careful to ensure that cars sold are not the same in different regions. These cars should be adapted or customized to the specific needs of consumers. In the emerging markets of Africa, for example, cars made for the good roads of cities of Cape Town in South Africa should not be sold to the steep terrains of other African countries, whereby strong, four wheel drive cars are needed. This means that in the case of the Elantra, for example, this car can be customized to meet the specific customer needs of different consumers in different African countries, not just the needs of the consumers in South Africa. Price- One of the reasons why Hyundai has won awards such as the North American Car of the year is because of the company’s pricing strategies. Hyundai has built its reputation not just by manufacturing high quality products at an affordable price, but also by the fact that its marketing skills used are founded on tactful pricing strategies (Peng, 2008, p. 57). The company has differentiated its prices from the conventional price set up of numerous of the other car makers. However, it is Hyundai’s effectiveness in targeting and meeting the needs of its customers that is currently pushing the company on top of other cars in the industry. Hyundai believes in the process of a long-term and stable manufacture of quality products at the lowest costs so as to market the same to consumers at the lowest possible pricing in a fast and timely process. The main purpose of administering prices in any company, especially in the auto industry is profitability and to ensure that the company is able to consistently boost its efficiency in all its product lines. Hyundai takes on a different approach for its pricing strategy, and achieve its objectives by using a sale-oriented purpose. The company also believes that it is their markets and consumers that determine the pricing of its cars, which is a recommendable strategy. One of the biggest lessons, however, that the company should capitalize on is the lesson learnt with the Hyundai Excel, the car the company began selling its cars in the United States market with in 1986. This model was a very fairly prices car model, considering that the company maximised on cost-cutting measures that had long-term negative effects for the corporation. Although it had been well received initially, the faults of the Excel model soon became apparent, and cost-cutting measures used by the company in the car’s manufacture led to a suffering in reliability. The company soon suffered greatly from a poor reputation for quality, something which caused sales to plummet and dealerships to abandon the company (Clifford, 1998, p 260). This means that the car maker should be very careful when marketing its cars to the U.S. market and, although it is important to market its car as the affordable and fuel saving car of choice, it should also be very careful not to compromise with the quality and reliability of the car. Quality should be the number one priority even as they seek to image themselves as the affordable car of choice. The company should also ensure that cars do not cost the same price, based on different regions. The different pricing will ensure that the company meets the specific needs of consumers based on different pricing, thereby being the preferred car manufacturer and seller. Place- One of the factors that have contributed to the success of Hyundai Motor Company is that they have dealerships in many locations all over the world, including in North America, where they have dealerships in the United States and Canada; different dealerships in India, China, Russia, Turkey, Japan, the Philippines, New Zealand and in Egypt. The marketing strategy of Hyundai should be focused towards ensuring that the company capitalizes on manufacturing its cars in its branch locations. To meet the needs of the emerging market in Africa, for example, Hyundai should invest more in its manufacturing plant located in Egypt, where the company’s local manufacturer is known as the Ghabbour Group, located in the Egypt capital city Cairo. Investing in this manufacturing plant especially for the African cars can greatly help the company in cutting costs associated with having to transport ready cars from other plants to the African continent. Hyundai should also invest in its own automotive dealers in other countries, for example South Africa, where the company is now very popular after winning the South African car of the year, 2012. This will help Hyundai to avoid the inconvenience and additional costs that come with having other automotive dealers sell a company’s products and services in a different country. Promotion- The promotion element is the single most important aspect of the marketing mix, without which the marketing objectives of Hyundai can never be achieved. There should be, therefore, a lot of concentration and resources given for this aspect. Hyundai has been implementing its promotion through different methods, including television ads, billboards, sponsors in games, exhibitions, and numerous other media. These promotion strategies have seen it that the Hyundai brand power has continued to rise, considering that it was ranked as the 65th Best Global Brand by a survey conducted by Business Week and Interbrand, having a brand value of approximately $5.0 Billion. The public image and perception of the Hyundai brands has been transformed dramatically in the recent past as a result of improving the quality of individual brands of the company. In 2011, the company was listed as the fastest growing car brand in the world, a position it had also won in 2010 (www.prweb.com, 2011, p. 1-3). The new message of the Hyundai Motor Company should focus on as it markets its products in both the United States and in emerging markets these important aspects. One of the promotion messages that the company should focus on while marketing its cars to the U.S. car market is that its car, the Hyundai Elantra, was named the North American Car of the Year during the North American International Auto Show. This model was also reported during the show to have sold over 200,000 cars since the redesigned debut of the model. Further, each country’s head office, either in the emerging markets of Africa or in the United States, should be in charge of the company’s national promotion strategies. Considering aspects such as different legal requirements for promotion and the different economic situations of different countries, it is very important that each head office takes charge of promoting the company in the host country. This will even make it easier for the company to adapt to the local markets and even reach the specific needs of local consumers in these countries. Market Positioning Hyundai has anticipated and responded to consumer demands and market trends in the United States, recording historical sales of over 640,000 cars in 2011. This was a recorded 20 percent increase compared to the sales made in 2010. In 2010, the company achieved a 24 percent increase in sales made, compared to 2009. What is most important to note is that before achieving this milestone, between 2001 and 2009, the company more than doubled their market share, which in 2011 had accounted for up to 5 percent of the auto market in the United States. The figure below shows the market share growth recorded by Hyundai Motor Company in the United States between 1999 and 2011 (hyundaiamerica.us, 2011, p. 1-3). Considering the increased growth in its market share all these years, something that not many cars can achieve considering the sluggish economy and even the fact that some car makers, for example General Motors, almost went bankrupt during the 2009 economic recession, this means that currently, Hyundai occupies the “white hot center” in market positioning. This is a tough position to beat for any competition, it is no wonder the company won the North American and South African car of the year 2012. The white hot center is a market position whereby all the attention of customers is at (Peng, 2008, p. 59). It is basically the prime and ultimate spot of customer attention, and every consumer and critics as well, are watching every step that the company may choose to make. Therefore, the best solution would be for the company to consider luring consumers into a different market place, for example the enterprise market place. Worth noting is that Hyundai has never positioned itself in the enterprise space. Alternative market position strategies will see to it that the company does not relent in marketing its products and that it is able to stay on top of its competitors. Fig 1: A graph showing the trend in market share growth of Hyundai in its U.S. market, 1999- 2011. (Source: http://hyundaiamerica.us/an-american-success-story/u-s-demand-sales-market-share/) Strategic Fit To establish the best strategic fit for Hyundai, the correct extent of company’s capabilities, product diversity and fitting the resources and vision of the company has to be established. For example, Hyundai seeks to focus on the emerging markets such as Africa, while the other category of target market is the middle-income and low-income consumer, who is interested in buying the affordable and fuel-efficient car. Compared to its competitors such as BMW, BMW focuses on the luxury cars segment, and is not interested in the low margin or mass markets. Honda, another of Hyundai’s top competitors, concentrates on the market for standard cars, markets that have smaller margins. As the most effective strategic fit for Hyundai, it is recommended that the car should consider focusing on core brands such as the award winning Elantra model, which is a fuel-efficient and affordable car fitting the present day economic challenges. The unique engineering methods that have developed the Hyundai Elantra are processes that Hyundai should capitalise on to ensure that the company continues to meet the needs of its consumers in various target markets. Major opportunities have been established for Hyundai, and the leading opportunities are found in the United States and Africa, where the company has won various awards recently. Exploiting these opportunities is the number one priority for Hyundai Motor Company. One of the ways Hyundai can maximize exploiting on these opportunities is by establishing the most effective strategic fit between its capabilities, resources and opportunities. Hyundai has various strengths and resources as an organization; the greatest resource currently is the good image that the organization has in especially the American markets and South African markets. The company enjoys the image of the preferred car brand in the United States and South Africa, following the win of the North American and South African car of the year awards, respectively. This means that the research and development team at Hyundai faces the challenge of ensuring that the present models are developed even more to ensure that the company maintains this image even in the future. Implementation/ Action Plan Action Plan Title: The Hyundai Motor Company Marketing Plan Marketing Period Goal: The following is an outcome statement that seeks to define what the company seeks to accomplish with regard to marketing its products and services over the Marketing Plan period Long-term Impact or Outcome: If the marketing plan objectives are achieved, Hyundai Motor Company will be the company of choice in the United States and in emerging markets, having a greater market share compared to its competitors. The company will also meet the needs and requirements of its consumers. Long-term Indicator: The list below includes standard(s) that have been developed to assess progress towards achieving the goals and objectives of the Marketing Plan. Annual Objective Measure(s) of Success Activities (limit 4 activities per objective) Q1 Q2 Q3 Q4 Team Member Responsible Completion Date Maintain the North American and South African car of the year. Ensure that required investments are made to research and development and other departments. A quarterly audit will be carried out to ensure the company meets its deadlines. P = Planned X = In Progress C= Completed P X C Conclusion This marketing plan has explored various elements that will see to it that Hyundai Motor Company is able to exploit to the fullest various opportunities available to the company. Through marketing objectives, it was established that Hyundai seeks to market itself as the affordable and fuel efficient car to the American market. It was also established that the company seeks to focus on the emerging markets of Africa. To meet these objectives, all aspects related to the company’s target markets have been explored, and it was found that in the American market, the culture of many young people is no longer favouring the purchase of cars as more and more young people prefer computers and related technologies. A marketing mix strategy has been examined, as well as a market positioning of the company. A consideration of the company’s capabilities, resources and opportunities has also been carried out, and it was found that for Hyundai to achieve its marketing goals, the company should ensure that it exploits fully its current image as the North American and South African car of choice. A consideration of these aspects will ensure that Hyundai Motor Company curves a niche in the auto industry and, more importantly, it will ensure that the company meets the needs and wants of its consumers. References Alemayehu, M. (2000). Industrializing Africa: Development Options and Challenges for the 21st Century. London: Africa Word press 362. Becker, H. (2006). High Noon in the Automotive Industry. New York: Springer, 133 . Boxwell, M. (2010). The Electric Car Guide. New York: Green stream Publishing 21. Clifford, M. L. (1998). Troubled Tiger:Businessmen, Bureaucrats, and Generals in South Korea. M. E. 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