Shifting Your Business Strategy – 2 August 20, 2009Posted by David Dirks in business strategy, marketing, Recession: How to Beat It!, Sales Strategy/Tactics, Solving Business Problems.
Tags: business strategy, changing business strategies, differentiation, hyundai, market differentiation, marketing, marketing strategy, strategy
It would be the understatement of the year to say that the auto industry has been literally crushed under the weight of too much production for too little demand. The auto industry problems are not just isolated to demand issues. Despite being the worst car buying market than we’ve seen in a few decades, there is one car company that seems to be profiting from the ravaged auto market. It’s also a car company that few would have thought would make it and it’s called Hyundai.
My first introduction to Hyundai was back in the early 1990’s when Hyundai was still a brash newcomer to the American buyers. It’s appeal to me back then was the same appeal it has today: cars available at a great price. There was only one problem. I saw the problem first hand at a Hyundai dealership when the salesman started the engine and smoke began pouring out the the engine. The salesman wasn’t fazed but my wife and I were aghast. Where is the smoke coming from and why? Without missing a beat, the salesman told us that there was some paint from the factory that had to sometimes burn itself off the engine block. Yeah, right. We left and never looked at a Hyundai since then. That was a long time ago.
Since then and now more than ever, Hyundai has been growing its market share here and in Europe. How did they do that? How did they come from laughing stock of the auto world to respected car manufacturer? How did they manage to introduce a luxury car, Genesis, that actually won the Car of the Year award?
They did it by shifting their business strategies. Notice the emphasis on ‘strategies’ in the plural. Over the years, Hyundai recognized that it needed to be more than a car company that built & sold cars at low price points.
The first issue they attacked was quality. Their manufacturing processes caused them a huge amount of grief and consumer distrust of the their brand. Over time, they dramatically improved quality in their manufacturing processes. Then, to attract buyers back to their showrooms, Hyundai did the unthinkable at the time: offering a 10-year, bumper-to-bumper warranty on every car they sold. In effect, they basically guaranteed the quality of their cars for the life of the car. This when the industry standard was 36,000 miles. This strategy went a long way towards getting their customers back into the showrooms and buying cars again.
More recently, to encourage buyers back into their showrooms during the worst economic conditions since the Great Depression, Hyundai brought out another big gun and shift in strategy. Many took the Hyundai Assurance Program as a marketing gimmick but that soon proved to be untrue. By assuring buyers that it would take back a leased or purchased vehicle in the event of the customers job loss, Hyundai took another big step towards growing marketing share.
Here are some of my takeaways based this continuing success story:
1. Acknowledge your weaknesses and actually fix them. Hyundai suffered initially with awful quality problems that make their cars the butt end of late-night comic routines. While offering cars at some of the lowest price points in the market was their basic strategy, they had to shift emphasis on quality. That meant shifting large amounts of resources within Hyundai to insure that quality was more than job #1. Hyundai gets great credit for recognizing a key weakness in their strategy and fixed it.
2. Create market differentiation by communicating your strategy shift clearly and loudly. Hyundai introduced its ground breaking ’10 year, 100,000 miles’ warranty to insure people understood it was serious about quality. It set a new bar on auto quality and Hyundai wasn’t afraid to put serious marketing muscle behind it.
3. Business strategies can always be fine-tuned. Staying true to its mantra of offering lower priced cars versus almost any other manufacturer, it entered the luxury market with it’s now highly acclaimed Genesis. The Genesis is a true luxury automobile but offered at one of the lowest price points on the market compared to similar luxury models from competitors.
4. Do more than your competitors to differentiate and strengthen your market position. When economic hard times hit, Hyundai hit back with its Hyundai Assurance Program. That kind of groundbreaking marketing strategy was just what the Doctor ordered to bring more buyers into the showroom.
Hyundai stayed the course on its purpose to build cars and sell them at low price points. It shifted it’s business strategy to insure that it could deliver on that promise and sell cars to satisfied customers. That’s a long way from its charred introduction more than 20 years ago here in the U.S.