Hyundai’s Turnaround
Minden Wilson

Consumer Behavior Dr. William P Creamer 9/8/12

Hyundai’s Turnaround
Minden Wilson

Consumer Behavior Dr. William P Creamer 9/8/12

Determine the role of Hyundai’s 10-year, 100,000-mile warranty in its turnaround and how it relates to postpurchase dissonance. The dramatic boosts in Hyundai sales prove that the 10 year 100,000 mile warranty is very much appreciated by consumers. According to Quality Digest, Hyundai has dramatically improved its quality ratings. Many industry experts and consultants state that Hyundai’s turnaround is remarkable. These authorities are beginning to describe the improvements that Hyundai has made and improve their ratings of the cars accordingly.
Hyundai’s engine as a whole has become more technically advanced. Its design follows a robust engine model, and there is a rigorous companywide quality effort in place which emphasizes defect prevention. 10 years ago, the Korean auto maker had a negative reputation in regards to vehicle quality. Quality studies now rank Hyundai as having made a 62% improvement during the years 2001 and 2006. J.D. Power and Associates have ranked the Hyundai as equal to Toyota and Honda in various categories. The 100,000 mile warranty that Hyundai offers mainly covers the engine and transmission. This warranty is one of the best in the industry, and Hyundai is very well- known and highly regarded for it. A normal warranty for the industry is 3 years and 36,000 miles. If and when a consumer was to experience post purchase dissonance as a result of the car’s function, the warranty would help to resolve the problem. The warranty will also make the consumer feel comforted by the fact that they have purchased a car guaranteed to be reliable longer than any other of those offered in the automobile market.

Discuss how much influence Hyundai’s value-pricing strategy plays in consumers’ ongoing mixed perceptions about Hyundai’s quality. Hyundai’s pricing strategy is in part focused on building confidence in the consumer that they can in fact purchase and make payments on a new car instead of purchasing a much lower priced or used car. Hyundai since 2009 has aggressively pursued customers with pricing and affordability options. The Hyundai Assurance Plus program protects a new car buyer by insuring the customer against possible losses in income. The program is offered for new car buyers as well as lessors. If after a year something should happen to the income of the buyer, Hyundai would cover the car payments for 3 months. If after 3 months the buyer can still cannot afford to make the payment the buyer can return the vehicle to the dealership with no negative effect on the buyer’s credit. In this way Hyundai can invest in their brand development as well as build a following.
Consequently, because of reasonable pricing, value incentives, reputation, and design/style of product, Hyundai remains separated from the genre of luxury automobiles. Those who can afford better established brands in terms of quality may regard Hyundai’s reviews, product, and discounted pricing as not on the level with other more opulent automobiles. As Hyundai goes on building its profits in sales and client base, its improved ratings, in regards to design and performance, should begin to change this overall perception in time; accompanied by the necessary changes needed to suit the consumers of this segment.

Assume that Hyundai successfully upgrades its quality image among all U.S. consumers so that they are universally recognized for high quality. Discuss whether this could result in greater sales and loyalty, and evaluate other factors driving consumer decisions and

satisfaction that Hyundai could focus on beyond quality that could drive even greater sales increases. Hyundai can really focus and learn from the Toyota Lexus model in order to upgrade their status beyond just that of a high quality economical vehicle to that of a brand known for its luxury. Many consumers, including those who are aware that Lexus is a Toyota brand vehicle, think of Lexus separate from Toyota for the most part in terms of brand status, and consider the car to be a very recognized alternative to cars like BMW and Mercedes. Car and Driver Magazine have rated the 2010 Hyundai Genesis as number one on the quality list, above Lexus and Ford. The magazine also states though that Hyundai has many more improvements to make in order to be accepted into the luxury segment before they can compete with the other well-known luxury vehicles like Audi A6, Lexus GS, and Mercedes E-class. At the same time the magazine states that Hyundai is offering many of these valued luxury features at a fraction of the cost.

Determine the VALS™ segment(s) that the woman belongs to who indicated “I’ve worked too hard to drive a Hyundai” and evaluate the possibility of this woman changing her mind if Hyundai sticks with its current positioning efforts.
The woman who said “I’ve worked too hard to drive a Hyundai” would very possibly be considered an Innovator in the VALS segmentation. She may be middle to upper middle class person who works in a job with a great deal of responsibility. She may have a general luxury preference as a result of all the hard work that she does and considers luxury to be her reward. She may be a person who enjoys status symbol product brands and receives a sense of self-worth

from her ability to purchase them. There is a very remote possibility that this woman will change her mind if Hyundai is able to produce a vehicle for the upper classes. Alternatively, this woman could also be referring to her own negative perception about the quality of the Hyundai. If she has been told that the car is an inferior design that experiences malfunctions then she would be expressing her disdain for this type of financial expenditure. Automobile repairs, labor, and replacement parts can be extremely expensive. She could have been referring to the fact that she requires an economical and reliable car with a good reputation, more like Toyota, so that she won’t have to worry about exorbitant expenses.

Discuss the pros and cons of Hyundai’s branding strategy for the Genesis. Hyundai’s choice of name for their new sedan explains a lot about their idea about the car and how they plan to approach its development. Genesis which means origin, beginning, and creation, is their first attempt to produce an offering to fit the “full-luxo” segment. Though the car has not been fully classed into this category by the majority of experts as of yet, the sedan is receiving excellent reviews thus far. Car and Driver Magazine is praising its qualities such as the stealthy handling of the car due to the 50/50 weight distribution. The magazine’s experts also state that the car is very quiet and has great brake feel. They recognize that this is Hyundai’s attempt at making a more luxury style car.

Reference
Hyundai Makes Quality Turnaround. (2006). http://www.qualitydigest.com/july05/news.shtml

Marketing strategies that build value. (2009) Brand channel always branding always on. http://www.brandchannel.com/features_effect.asp?pf_id=472

Genesis 3.8 first place: For for four. (2010). Car and driver intelligence, independence, irreverence. http://www.caranddriver.com/comparisons/2010-hyundai-genesis-38-page-5