As a latecomer in Korean credit card market, Hyundai Card has gradually increased the market share since it entered the business in 1999. With its tie with Hyundai motor group, the company branded itself as “Hyundai M Card”. It started off by attracting buyer to consider using the card to purchase Hyundai automobile by offering discount. In later stages, the company has adopted the customer segmentation strategy to diversify its target groups of clients.
With the emphasis on market segmentation based on different groups of card holders, utilizing clients’ card usage data, it has led to the unique customized service via alphabet card marketing activities. The strategy has led to great success, Hyundai Card received a Number One ranking in the Korea’s National Customer Satisfaction Index.
The Korean credit card market has experienced a period of overheating due to a rapid expansion in the number of cards, reduced standards for issuing cards, etc. However, in recent years, Korean government has tighten up the policy in the credit card industry, and it results in lower % returns for the card issuer. The market has become saturated, consumers are having too many different options in card for different needs. But the fact is that most people are only using 1 or 2 cards, and the rising cost of operating business also presents an area of concern for major card player like Hyundai Card.
Hyundai Card is a credit card company in South Korea. Hyundai Motor Group and GE Capital are two of their largest shareholders. The company entered the credit card business in 1999 through the acquisition of Diners Card as a subsidiary. In 2001, the card’s name was changed to “Hyundai Card”.
Credit card business in South Korea is a competitive market. According to a report of The Economist, Korea has the equivalent of 4.4 cards for every member of the labor force. And Koreans made frequent transactions with credit card, on average, each Korean swipes card for 129.7 times in 2011. That number has well exceeded Americans (77.9) and Canadians (89.6).
Hyundai Card is the fourth biggest credit card issuer in South Korea. As per stats in May 2007, it captures a 9.96% share of the market. The Korean credit card market is led by Koomin (16.21%), LG (16.08%), Samsung (12.33). Among the major players in the credit card market, Hyundai is considered as a latecomer.
Hyundai card has continued to increased its market share in the competitive Korean market. As per stats at the end of 2012, Hyundai Card had a market share of 14.3%. And Hyundai Card has also received a good market reputation being ranked as Number One in the Korea’s National Customer Satisfaction Index.
Critical Marketing Issue
The credit card industry has underwent an adjustment period. Credit card company experience a growth in the number of late payment and bad debts. And the card market has become saturated, as there are too many card products in the market, which card caters for different need. In fact, most card holder only uses 1 or 2 credit card to purchase. Another is the political factor of the tightening government policy, it has also present a problem to card issuers as they are having lower % of return in the business. In 2012, the government barred card companies from extracting higher fees from smaller merchants. And it also make it easier for customer to compare interest rates across products and harder for less credit worthy borrowers to spend beyond their means. As a result, many card issuing companies started to cut the budget and become more conservative in doing their card business.
1. Try to move out of the business by selling it to a suitable buyer
Pros: If the company can find a suitable buyer and sell the business at a good price, once and for all, the company does not need to face the problem in the market. The proceed of selling the business may help raise substantial fund capital and enable the company to invest in other business with higher return.
Cons: With the end of the credit card business era, Hyundai may suffer certain degree of reputational loss in the domestic market, people may start to worry about the future of the company, it may cause bigger problem to other core business such as the automobile business.
2. Down size the business by cutting cost
Pros: The company can remain as a player in local card business, and the company can allocate additional budget to invest in other areas of business with higher return
Cons: With less budget allocated, the company may start to lose the status as one of the four biggest player in Korean card business
3. Stay aggressive in card business but try harder to expand the international market
Pros: While the company remains its presence in its domestic market, the company will develop more profit growing point in overseas market
Cons: The uncertainty in less mature overseas market may not guarantee profit, it can also lead to unexpected loss for the company
Three options may be good options for different companies. For prestigious brand name like Hyundai Motor and GE, it is always not a wise choice to come up with a solution with the aim of securing short term profit at the expense of sacrificing the brand equity. As a late comer to the card market, Hyundai card has experienced success by capturing larger market share. And the good reputation of customer satisfaction is also an important asset. Therefore there is no way for the company to sell or downsize their business. With less promising future in the local market, the company should start to concentrate to penetrate into other markets in order to develop more profit growing points and remain as a leading brand name in the credit card business. The company has the experience in automobile business in overseas and relevant expertise in Korean credit card, those are the strength that can help the company to capture the opportunities in those less mature market at the same minimizing the chance of failure.
Mainland China, other developing South East Asia countries
With its tie with the branded name in Hyundai Motor, it should position itself as one of the premium brand in the market.
Marketing Mix Elements ( 4 Ps)
Price: Should aim at customers at high end with high social status
Product: Black and Purple card are issued for high social status people in Korea, it can also be used in other markets
Promotion: Seek cooperation with branded companies such as winery, golf club,etc. Try to offer card holder with incentive using the card to purchase
Place: Golf club, luxury suites
Evaluation: The company should conduct effective marketing survey at least once a year to evaluate the effectiveness of marketing campaign and the overall strategy
For prestigious brand name like Hyundai Motor and GE, it is always not a wise choice to come up with a solution with the aim of securing short term profit at the expense of sacrificing the brand equity. As a late comer to the card market, Hyundai card has experienced success by capturing larger market share. And the good reputation of customer satisfaction is also an important asset. Therefore there is no way for the company to sell or downsize their business. With less promising future in the local market, the company should start to concentrate to penetrate into other markets in order to develop more profit growing points and remain as a leading brand name in the credit card business. The company has the experience in automobile business in overseas and relevant expertise in Korean credit card, those are the strength that can help the company to capture the opportunities in those less mature market at the same minimizing the chance of failure.
HyundaiCard’s Marketing Strategy, by Chan Soo Park and Ronald D. Camp II, 2009
Hyundai internet home page (http://ir.hyundaicard.com/ceh/ho/cehho0101_01.hc)
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