ABC: Hyundai Coalesces Its Marketing Plan

Hyundai 2011 Sonata

Hyundai on Thursday took to the Web to talk to the press about the company's most important new product in years, perhaps ever -- the 2011 Sonata sedan. John Krafcik, Hyundai Motor America CEO, launched the webcast from -- appropriately enough -- the driver's seat of the new car, whose sticker price begins at just under $20,000.

After following Krafcik into the hills of La Jolla, Calif. to the Torrey Pines Lodge, the webcast switched to a press conference in progress there. Krafcik strolled in, apparently having just arrived, and said that the company is spending more on Sonata's launch than on any other vehicle it has ever introduced in the U.S.

"Sonata is our best-selling car, and if you can distill our brand to one car, it's Sonata. We spent $80 million to launch Genesis, and $120 million on the last Sonata," he said. "We are spending $160 million for the new Sonata, and that's big money -- especially for an automaker with our share of the market."



He said that over the past 11 years, Hyundai's U.S. share increased to 3% by 2008. "By last year, we reached 4.2%, and so far this year we are ahead of that pace," he said, adding that the company's gains do not reflect Toyota's losses, as the 4.2% level was achieved in 2009. "In that economy, consumers had to think more deeply about durable purchases, and that really helped us."

Hyundai's marketing strategy this year is a tripartite plan the company is calling "ABC," meant to address marketing challenges around rational, environmental and emotional consumer considerations. Krafcik said that in terms of rational barriers to purchase, Hyundai is putting its warranty offerings, its job-loss car-return program launched last year, and all quality and safety efforts under the "Assurance" umbrella. "Assurance" was introduced initially as the name for the car-return program to address the faltering economy.

Hyundai's "Blue Drive" eco-strategy focuses on, among other things, earning the company the best mpg numbers in the industry. Krafcik said the new Sonata gets 35 mpg, and that Hyundai has reached the No. 1 position in EPA fuel economy.

Scott Margason, who directs product planning for Hyundai Motor America, said fuel economy is still a big deal for car owners even though gasoline prices are down. "The last big change in fuel prices [in 2008] changed peoples' psychology," he said. "All the research we see suggests that fuel economy is staying at the very top of peoples' radars. It is a big purchase consideration: consumers want good power, style and features but also fuel economy. That's what we are trying to do with Sonata."

The challenge on the "emotional" front, explained Krafcik, is connecting with consumers through cars with elements like the "Fluidic Sculpture" design language developed at Hyundai's Irvine, Calif. design studio, as well as "fun-to-drive dynamics and high power-density powertrains," he said.

Krafcik said the one remaining barrier for Hyundai has been consumer perception of Hyundai's vehicle residual value. "There is still a perception that Hyundai vehicles depreciate more, but this isn't true now," he said. "Our job is to get consumers to see that."

According to Krafcik, Hyundai has a slight advantage over Toyota in resale value based on three-year depreciation, and "compared to Ford, we have a significant advantage. That's terrific for us because depreciation is one of biggest costs of ownership," he said.

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