by Dwi W
More than ten years ago, when hyundai started its car manufacturing, the quality of the company is not reliable. Most people that bought that brand complain about the quality of the car and the reliability of the car. But a couple years ago when the recession hit the United States, hyundai was the only brand that never showed any negative number in their financial report. What makes them able to do this? How did they do that?
To answer the question above, we need to be critical about how the company works their step toward their success. As Porter’s gneric strategies explains in the text book, there are three strategies to enter the new market:
1. Broad cost leadership
2. Broad differentiation
3. Focused strategy
Hyundai has been following the broad cost leadership strategy. The company has been able to offer the lowest prices for many particular models and style that appeal large audience. Pricing has been one of the strengths of hyundai. I have seen many people chose to get hyundai because of this reason. At $9970, Hyundai Accent is one of the cars with the lowest MSRP in United States. But would that be enough to attract customers to buy hyundai? Of course not. Many people that got disappointed with the quality of the cars change their faith to other brand such as Toyota and Honda because they are known for their reliability.
The management uses the combination of the research and the evaluation of the marketing to expand the company. Hyundai realized that their questionable brand causing the after market price to fall very quickly comparing to competition. The management’s answer to this problem is to offer the best warranty they can possibly do which is 10 year warranty or 100,000 miles. By adding the warranty of the car, the company increases the switching cost to the customers. It would cost the customer if they would like to switch to another brand since they might get less warranty from the other brand.
The strategy they chose, the broad cost leadership, has been supported by their warranties and after-sales service. I think this is what makes hyundai grows, even when the market is shrinking. According Autotalk.com, Hyundai sales increase by 19 percent comparing to 2009 sales. When a new comer entering the new market, it is wise to have one of the three generic strategies by Porter.
Baltzan, P. & Phillips, A. (2009). Business Driven INFORMATION SYSTEMS. (2nd Ed.). New York: McGraw-Hill/Irwin.
Malsbury, Michelle. April 30, 2010. A Strategic Analysis of Hyundai. American Chronicle. Retrieved on Aug 30th, 2010 from: http://www.americanchronicle.com/articles/view/153345
AutoTalk.com. Hyundai Posts 19 Percent Sales Increase in July. Retrieved on Aug 30th, 2010 from: http://www.autotalk.com/hyundai-posts-19-percent-sales-increase-in-july-5541/