With Hyundai acquiring Kia in 1998, they are two of a select few brands that have been able to move upmarket successfully. Despite continuous improvements in quality, they suffered from poor consumer perceptions in almost every major global automotive market.
Implementing our demand-first innovation and growth methodology, Vivaldi conducted a massive quantitative global study to identity new needs and wants given the rapidly changing consumer behavior in the automotive industry, and to establish performance benchmarks.
As a direct result of our work, both companies were able to gain traction in the automotive market. Hyundai’s sales nearly doubled in two years, and significant design and product innovations were introduced to fit the newly-defined brand identities.
One of the toughest challenges for brands is to move upmarket successfully. Few brands have achieved it, Hyundai and Kia are two that have become remarkable success stories over the course of a relatively short period of time.
These two automotive brands started from a very difficult spot. Hyundai acquired Kia in 1998 with largely overlapping product portfolios. Both brands suffered from rather poor consumer perceptions in every major global automotive market, except its South Korea home base – resulting in a need for a fresh brand portfolio strategy.
Hyundai and Kia had serious image issues. Most consumers knew Hyundai cars as inexpensive compacts, usually stripped down models that are typical of fleet purchases. Some called Hyundai’s “Cars that make trouble” – a play on the company’s slogan, “Cars that make sense.” Resell values were very low, and sales fell rapidly.
But despite consumer opinions, Hyundai Motor Corporation had significantly invested in improving quality, manufacturing and design over several years, and by the mid 2000s, the quality of the cars were at the top, comparing well to the best cars on the streets. The company received major quality awards including from J.D. Powers.
Around 2006, Hyundai Motor Corporation and Kia Motors made a drastic shift in how it approached marketing of its cars. Until then, it managed product launches and it created advertising campaigns to manage those launches. It even had a consumer target. Hyundai focused on the progressive mainstream consumer, a more desirable upscale consumer. Kia focused on the Young at Heart consumer that was defined as the driver that would buy not just for badge or the brand name, but would value quality, style and ergonomics.
Vivaldi worked with Hyundai and Kia to evolve its current approach to management of the brands toward a proactive brand management system. As a foundation for this system, we researched consumers in five major European markets, the U.S., China and South Korea with the goal to define the market opportunity for Hyundai and Kia, to identity new needs and wants given the rapidly changing consumer behavior in the automotive industry, and to establish brand performance benchmarks.
The research included a massive quantitative global study that was preceded by a set of highly innovative and novel qualitative approaches. Applying our demand-first innovation and growth methodology we identified distinctive car driving routines, and unique patterns of shopping behaviors that helped rethink and re-conceptualize traditional needs and wants categories in the automotive industry. These driving routines and distinctive shopping pattern were then merged with global needs and wants, automotive and cultural lifestyle trends to reveal a demand landscape that holistically captured consumers’ life around cars and the potential role Hyundai and Kia could play in that life.
In building the proactive brand management system, Vivaldi developed a brand strategy (we call brand identity system) for each of Hyundai and Kia brand at the country level, regional level as well as globally. This brand strategy proved to be a strategic and invaluable framework that helped define market opportunities, growth domains, and demand platforms where Hyundai and Kia could succeed more likely relative to consumers’ competing alternatives. Success was determined in terms of conversion probabilities of consideration, purchase, and repeat purchase. This helped effectively guide communication strategies at the local level by focusing creative on the relevant and most powerful purchase drivers or triggers of conversion.
At the global and highest level, the essence of the Hyundai brand strategy was defined around “refined and confident” while the Kia essence was defined around “exciting and enabling.”
A second major objective of our work was to organize the comprehensive Hyundai and Kia product portfolios by taking into consideration the forward-looking product roadmap for the next years. The goal of organizing the product portfolio was to create a brand portfolio and architecture strategy that would simplify the product lineup, reduce the complexity and create brand-building synergies. Another goal was to optimize the model lineup so as to focus marketing and sales efforts. Ultimately, the effort was designed to drive margin improvement through more efficient allocation of marketing spend and sales efforts, while also creating strong brands.
A third major effort was to apply and codify global brand management practices across the vast network of Hyundai and Kia organization around the world.
Since the conclusion of our project, Hyundai and Kia have moved in clear separate directions, moving from being marginal, low-end players to being extremely strong and unique brands in a highly competitive market place. Hyundai’s sales nearly doubled in two years, from approximately 2.5m to over 4.6m in 2013, despite the global recession. Much of this growth came in Europe and the US, where Hyundai and Kia had previously very little track record of success. In addition, significant design and product innovations that were introduced to fit the newly-defined brand identities, such as Kia’s aggressive “Tiger Nose” design language – created by the designer behind many of Lamborghini’s recent supercars – and Hyundai’s industry leading 7-year warranty, helped reinforce the two brands’ new identities.
