The author comes from Iran, with an ideological and religious fanatic government which owns and controls all of economical and industrial activities with an armed to teeth minority. In such countries they can produce and sell any low quality with any prices that they want, and actually customers have not many choices, and almost all of promotional techniques and strategies are meaningless! So here we are talking about free trade and free market countries like US. This paper review and scrutiny the circumstances surrounding the promotional and advertising Strategies for two automotive companies: TOYATA and HUNDAI.
The author is very curious about those companies, because HUNDAI (1967) began car production almost 32 years after TOYOTA (1935)! But now, in all aspects both companies are equal in quality, branding, marketing, price and customer service, even HUNDAI is further! HMC (Hyundai Motor Company) was unknown brand with low quality and cheap price cars, but after it came in the US market converted its products to high quality and luxury quickly and stealing loyal customers away from many industry pioneers! But how was this late-moving car maker able to gain an advantage in this extremely competitive market? (Graf B, 2013)
Definition of Advertising: The term “Advertising” first appeared in the 17th century. It has its root in the Latin word “advertere,” which means, “to make people notice or know.” It can be roughly explained as “to extensively notify the public.” According to the Dictionary of Chinese Etymology, the Chinese definition of advertising means, “openly announce to the public,” with the annotation of “such as putting up notices or publishing advertisements in newspapers.” (Yan Boqin, 1978)
Definition of Marketing: “Marketing” is an economic term meaning promotion and distribution. Originally applied in agriculture, it drew more and more attention after the 19th century and spread rapidly. From economic, social, business and customers’ angles, the property of its definition can be determined (Li Zongru, 2004).
For highlighting the brand in the eyes of public and attracting new customers, product promotion is one of the essentials. There are many channels to promote a product or service. Successful promotions strongly depends on believe and culture of people, style of living, income level, government policies and economical and industrial infrastructures. Some firms use multiple methods, while others may use different methods for various marketing purposes. Irrespective of the type of service or product, a strong group of promotional strategies can help position the company in a favorable light with not only current customers but new ones as well.
The following are top ten promotional strategies: “1- Contests, 2-Social Media, 3-Mail Order Marketing 4-Product Giveaways, 5-Point-of-Sale Promotion and End-Cap Marketing, 6-Customer Referral Incentive Program, 7-Causes and Charity, 8-Branded Promotional Gifts, 9-Customer Appreciation Events, 10-After-Sale Customer Surveys” (Carl Hose. 2014; Small businesses; Retrieved December 2, 2014 from http://smallbusiness.chron.com/top-ten-promotional-strategies-10193.html)
Comparing the promotional strategies used by Toyota and Hyundai for a similar product
Today almost all of carmakers have a lot of experiences and they have access to modern and new technologies. So they can produce good quality and good design cars and also offer good services to customers, especially in US, there is no way to sell any products with low quality and low customer service. In result the best promotional strategies are those that involve culture, attitudes and beliefs of the people. The following are some examples of such strategies. Green Environment: Increasing public awareness about environmental protection, governments forced to implement hard regulation and criteria for automobile firms.
Toyota published on its website:
1. Diversifying energy sources: “Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.” 2. Fuel Cell: “By generating electricity from hydrogen, Toyota’s fuel cell vehicles are not only environmentally friendly they’re also highly energy efficient. With such eco-friendly characteristics, Fuel Cell Vehicles are the next step toward achieving sustainable mobility.” 3. Plug-In Hybrid: “Introducing the next step for eco-friendly cars; a combination of the proven engineering of current hybrids with home recharging. It has an increased electric range and produces lower emissions.”
4. Measuring environmental issues surrounding vehicles: “For more improvements in efficiency, Toyota proactively manages power train efficiency, reduces vehicle load, and controls energy management by integration of fuel-saving technologies such as charge control, idling stop, etc.” 5. Various vehicles: “Along with our emphasis of conventional vehicles and hybrid vehicles as fundamental core technology while pursuing further advancement.” 6. Alternative fuels: “Based on these core technologies, Toyota will develop next-generation vehicles utilizing alternative fuels such as gas fuel, electricity and hydrogen.” (Retrieved December 2, 2014 from http://www.toyota-global.com/innovation/environmental _technology/) Hyundai published on its website:
1. Blue Drive: Our Blue Drive® technology gives you lower pollution and higher performance. Blue Drive is a philosophy that guides Hyundai in its effort to become the automotive leader in sustainability. It’s helped focus our engineers and designers on creating lighter vehicles, developing more efficient power trains and even inventing proprietary hybrid technologies. 2. Plug-in and zero-emission: In the future, Blue Drive will expand to include plug-in hybrid vehicles, zero-emission electric vehicles and fuel-cell vehicles that run entirely on hydrogen. Their only emission is water. 3. Electric hybrid: Hyundai introduced the first electric hybrid with electrifying performance. Our engineers have invented the industry’s most advanced hybrid vehicle. 4. New battery: Unlike other hybrids on the market, ours uses a patented Lithium Polymer battery. It has 40% less volume; it’s 25% lighter and 10% more efficient. T
he battery also has a longer life-span-it comes with a lifetime warranty guarantee. So you can feel good about preserving the environment for the life of your vehicle. (Retrieved December 2, 2014 from https://www.hyundaiusa.com/new-thinking/environment.aspx) Slogan: “An advertising slogan is usually a short tagline – less than five words — that tells potential customers the benefits they can expect when choosing your product or service, or establishes your company brand.” (Kristen Hamlin, 2014; Retrieved December 2, 2014 from http://smallbusiness.chron.com/ importance-ad-slogans-31343.html) 1. Toyota’s ownership slogans: marketing efforts in North America have focused on emphasizing the positive experiences of ownership and vehicle quality. The ownership experience has been targeted in slogans such as “You asked for it! You got it!” (1975–1979); “Oh, what a feeling!” (1979 – September 1985, in the US); “Who could ask for anything more?” (September 1985 – 1989); “I love what you do for me, Toyota!” (1989–1997); “Everyday” (1997–2001); “Get the feeling!” (2001–2004); “Moving Forward” (2004–2012); and “Let’s Go Places” (2012–present).
2. Hyundai’s Brand slogan: “NEW THINKING. NEW POSSIBILITIES.”; reflects the will of Hyundai Motor Company to create new possibilities to benefit the world and its people by encouraging and developing new thinking. All members of Hyundai have the brand slogan deeply engraved in their hearts as they move forward in their effort to provide new values and experiences desired by today’s customers through innovative ways that are unique to the brand, driven by new thinking about customers and cars.( Retrieved December 3, 2014 from http://worldwide .hyundai.com/WW/Corporate/Corporate Information/BrandSlogan/index.html) New Compact Vehicle Strategy: According to the Ford India President, compact car sales are expected to double by 2018 from around one million units in 2013.
This surge in demand in expected to be fueled by rising disposable incomes in the second most populous country in the world, and also owing to the increasing demand for fuel-efficient smaller cars due to rising fuel prices.( Trefis Team ,2014. Retrieved December 3, 2014 from http://www.forbes.com/sites /greatspeculations/2014/06/13/tata-motors-looks-to-improve-passenger-car-sales-by-penetrating-the-compact-segment/) 1. Toyota: The automobile market in emerging markets is growing each year in tandem with the economic growth of each country. Within those markets, there has been marked growth in the sales of compact vehicles, so Toyota is promoting a new compact vehicle strategy that emphasizes the compact vehicle lineup and seeks to meet the needs of consumers in emerging markets.
2. Hyundai: The South Korean automaker ranked seventh among mass-market brands in the this year’s U.S. Initial Quality Study by J.D. Power and Associates, topping such brands as Toyota, Infiniti, Audi and Lincoln. Hyundai’s Accent compact and Elantra small car were named among the top three cars in their segments.(Hans Greimel, 2011. Retrieved December 2, 2014 from http://www.autonews.com/article /20101206/RETAIL03/ 312069982/hyundai-plans-new-brand-strategy) Financial Services Strategy: Every year, millions of people around the world transition out of poverty in any number of ways—by adopting new farming technologies, investing in new business opportunities, or finding new jobs, for example. Effective tools for saving, sending, and borrowing money and mitigating financial risks can help people weather setbacks and achieve greater financial stability over the long term. (Retrieved December 4, 2014 from http://www. gatesfoundation.org/What-We-Do/Global-Development/Financial-Services-for-the-Poor)
1. Toyota: Toyota Financial Services has constructed a global network that covers approximately 90% of the markets in which Toyota sells its vehicles. Mainly concentrated on auto loans, leases and Toyota dealer floor plan requirements, TFS provides auto sales financing to approximately 5.4 million customers. Thus effectively helping them in making their own cars more affordable to their potential consumers all around the world. Again being a strategy that helps them a stronger competitor in the market.
2. Hyundai: Through our service brands, Hyundai Motor Finance and Kia Motors Finance, we provide financial products tailored to meet the needs of Hyundai and Kia dealerships nationwide, including dealer inventory and facility financing. And, through these dealerships, we provide indirect vehicle financing and leasing solutions to over 1 million retail customers. Our subsidiary, Hyundai Protection Plan, Inc. offers vehicle service contracts and other vehicle protection products under the Hyundai Protection Plan and Power Protect brands. (Retrieved December 2, 2014 from http://www. Hyundaicapital america.com/hca.aspx)
Two uses for consumer-oriented promotions that could assist a company in both the short and long term for the carmaker companies
What are consumer-oriented sales promotions? There are two points of view: 1- Retail Promotions consist of inducements offered by retailers to consumers includes retail coupons, price discounts, double coupons, special displays, features etc. 2- Consumer Promotions consist of inducements offered by manufacturers to consumers includes manufacturer’s premiums, bonus packs, coupons, samples, rebates, etc. There are some reasons for the importance of the sales promotion.
First, the growth of retailer power in distribution channels has led to an excess in consumer promotions. Sometimes, manufacturers make special offers to consumers because a powerful retailer insisted that they do so. Another time, as a way of neutralizing retailer power by intensification the bonds of loyalty consumers may feel toward the brand. Either way, retailers frequently serve as the driving force behind consumer promotions.
Second, the type of competition has converted significantly during recent years resulting in ever greater consumer price sensitivity. The growing of brands and brand extensions, intensity segmented consumer markets, and lower brand loyalty have combined to make consumers much more aware of price given that many product categories are populated by several competitors.
Third, price deals have become the rule rather than the exception for many products. Rebates on certain brands of automobiles, department store sales, and coupons on many grocery items are only a few areas where consumers have grown to expect price breaks. Indeed, the expectation is more than, when possible, many consumers will wait for promotional offers rather than buy with no deal.
Fourth, advertising clutter has forced marketers to find new ways of getting consumer attention. Product benefits alone frequently prove insufficient to prompt consumer action much less get their attention. Thus, marketers increasingly look to sales promotion to find ways of breaking through to customers who face a constant bombardment of promotional messages.
Eventually increasing of consumer promotion can also be attributed to more pressure on marketing management for short-term results. Investors want to immediate bottom-line results rather than the long-term health or stability of the companies in which they invest. Sales promotions are tools to increase near term sales. However, as their use becomes more common, their costs become regular and recurring and therefore potentially self-defeating. (Retrieved December 5, 2014 from www.udayton.edu/…/Consumer%2520Promotion.p) The strategic manner in which the leading car company has made its pricing decisions by using one or more of the four pricing objectives
“The four Ps of marketing is the combination of product, price, place (distribution), and promotion. Marketers develop strategies around these four areas in marketing to enhance branding, sales, and profitability. “ (Ross Gittell, 2014, Retrieved December 5, 2014 from http://catalog.flatworldknowledge.com/bookhub/reader/3157?e=gittell_1.0-ch06_s02#)
Price is the only revenue generating element amongst the 4ps, the rest being cost centers. Pricing objectives or goals give the company direction to the whole pricing process and consider the following: 1- Survival; 2- Get competitive advantage; 3- Financial, marketing, and strategic objectives of the company; 4- Enhance image of the firm, product or brand; 5- Hold price leadership; 6- Increase market share; 7- Consumer price point and elasticity; 8- Available resources; 9- Catch target of return of investment and sales; 10- Prevent new entrants; 11- Match competitors prices.
Toyota gets credit for being the most known brand on the market; however the Corolla comes up nowhere in the competitor charts in terms of price, model distinction, or performance (TrueTrends, 2012). Providing a competitive advantage for the Corolla requires differentiating the car in pricing, quality, service, innovation, brand, convenience, and anywhere else that makes it more desirable over its competition (McCrimmon, 2008).
How Toyota as a leading company can offer lowest prices? i.e. $89 a month for lease! The answer is: by maintaining its lowest costs. Along with differentiation Toyota also uses low cost to try and gain a competitive advantage in the automotive industry. “Toyota is (or was at the time) the low cost producer in the industry. Toyota achieves its cost leadership strategy by adopting lean production, careful choice and control of suppliers, efficient distribution, and low servicing costs from a quality product.”(Michael E. Porter, 2013) This quote from Michael Porter sums up how Toyota achieves this low cost strategy. Through research, it is evident that Toyota is still the low cost leader in the automotive industry.
Societal trends have moved away from an individualistic culture—which identified social status and hierarchy based on material possessions—to an environmentally aware society (Grewal & Levy, 2012). With consumers’ minds wrapped around things like fuel mileage, cleaner emissions, and hybrid technology we find them moving further away from SUVs and trucks (Farooq, 2012). However, the 2013 Corolla is foreshadowed to be outshined by the Dodge Dart, as it loses some of its competitive edge in pricing and other award winning features (TrueTrends, 2012).
By 2012 Toyota is planning to have more than 20 models that use batteries to extend fuel economy just like their Prius (Krolicki). Although they have not been as aggressive in the electric car market recently, like their competitors, they are planning to release a rechargeable version of their Prius by June 2012 (Krolicki). This re-chargeable version will position Toyota to attempt to take over as a low cost leader of hybrid technologies within the market, which supports Toyota’s overall strategy of low cost (Krolicki).
Two actions that other car companies may take in order to differentiate themselves and gain a competitive advantage Hyundai rightly understood the consumer motivations to create magnetic products, price them strategically, position them sharply and keep making the magnetism more potent. Having understood the finer differences in consumer motivations, it opted for sharp arrow ‘reasons-to-buy’ differentiation over the ‘blanket-all approach’ taken by most of the other players. It is an aggressive marketer. It focuses on medium and low price products. Hyundai has also started premium products range to capture the growing market. (Anshuman goyal, pricing strategy of Hyundai, 2007; Retrieved December 9, 2014 from www.hyundai.com)
The segments are based on type of customer like age group, attitude, end use of product, demographic behavior and purchasing power, status of the people of the region. Each competitor has its own strong point and value and position there product so as to attract maximum number of customers. (Kottler, Keller, Jha, Koshy, 2007, Marketing Management)
Hyundai brand continues to dominate the market for premium cars, despite increasing competition. The firm should first consider the competitors price. If the company i.e. Hyundai contains features not offered by the nearest competitor, it should evaluate their worth to the customer and that value to the competitor price. Competitors are more likely to react when there is high competition. In case of Hyundai, many products are there such as Sonata, Santro, Hyundai i10, Accent etc. Hyundai continues to provide stiff competition to Honda in all the segments and poses an even bigger threat to expansion plans of Hyundai. (Anshuman goyal, pricing strategy of Hyundai, 2007; Retrieved December 9, 2014 from www.honda.com) Two examples of the most effective advertising medium for a Car company
The TV advertising have been having the largest audiences in all ages, but car buyers are specific ages who have not enough time to watching TV even
less than one hour per day, because they are too busy in today competitive era. Instead the internet via smart phones and computers is like a ghost became as a inseparable part of their life, at any time more than 15 hours a day, and even when they are eating, showering, walking, sporting, biking, swimming, and in any place even in high mountains and deep forests, roads and villages!
Another reason for effectiveness of internet rather than TV is: new intelligence algorithms via data mining analyze the behavior of customers and put proper Ads to the web pages related to the target customers with very lower advertising costs. As a most important subject which advertisers should also pay attention to it is cultural differences, they have to be careful since cultures vary in different countries, they must understand the local audience culture before releasing new commercials, in order to avoid any misunderstanding.
Another internet related way for advertising can be the online promotional games, such as Toyota’s use of MSN commercial games to promote its products, for instance. There are two interactive contents focusing on entertainment: fun activities and downloads. Both of them were found in about one third of the 100 web sites, respectively. Fun activities were also utilized to promote the brand in the sites and they are not related to scores or performance.
Activities for fun included virtual test drive (www.gmc.com), virtual plant tour (www.cocacola .com), virtual auto show (www.lexus.com), e-cards (www.saturn.com), a coloring sheet (www.wendys.com), a virtual skin beauty analysis (www.neutrogena.com), and so forth. Downloads promoting and affiliated with the company’s brand were also analyzed. Desktop images such as wallpaper and icons were the most offered downloads, followed by music (Seounmi Youn, 2001, Retrieved December 9, 2014 from http://list.msu.edu/cgi-bin/wa?A3=ind0209c&L=AEJMC&E =0&P=3326464&B=…_&T=text%2Fplain;%20charset=us-ascii)
For the carmakers, another impressive promotion method is “complete test ride”. The buyers are very keen to getting experience to drive with a brand new car and having the opportunity to really feel its advantages and disadvantages. For encouraging the customers to more participating in test drive activities, offering some gifts can always increase the interest and willingness of then. Getting the best result always does not correspond with the cost of the advertising. So carmakers should choose their advertising media in accordance with today era. However as always, inviting stars to speak for different models with different appeals will have so effectiveness to increasing the public awareness.
Some observers suspect that Hyundai’s recent successes may be anomalies, abetted by the difficulties that the company’s U.S. and Japanese competitors faced after the global economic crisis, the rise in the yen’s value, Toyota’s wave of recalls, and the 2011 earthquake and tsunami in Japan and Fukushima nuclear disaster. Others say that the company’s highly protected home market has enabled its growth, allowing Hyundai to establish a global presence while its domestic competitors restrict themselves to tiny slivers of the Korean market.
But the single factor that has made the most difference is the company’s own interest in building world-class capabilities. Starting in 1998, Hyundai’s leaders set out to develop the kind of prowess the company would need to become a global automobile powerhouse, able to hold its own in the United States and other fiercely competitive markets. Early on, that meant offering a comprehensive warranty and taking specific steps to dramatically improve its quality ratings. Once customers were convinced of the brand’s reliability, Hyundai added other capabilities, such as design, which led to a more diversified product line and more stylish features. Meanwhile, it developed a knack for getting the word out through clever, consistent marketing.
The result is a coherent mix of quality improvement, design, and marketing that gives Hyundai a clear advantage over its industry competitors. Although these are required capabilities at all automakers, Hyundai has excelled at combining them over the past decade, and its sales numbers reflect this success. The company’s effort to become a world-class automaker is beginning to pay off, and it’s far enough along that its story can be credibly told. (Source: Strategy & Business. February 26, 2013. Retrieved December 2, 2014 from http://www.strategy-business.com/article/00162?pg=all)
Anshuman goyal, pricing strategy of Hyundai, 2007; www.honda.com
Anshuman goyal, pricing strategy of Hyundai, 2007; www.hyundai.com
Carl Hose. 2014; Small businesses; http://smallbusiness.chron.com/top-ten-promotional-strategies-10193.html
Hans Greimel, 2011. http://www.autonews.com/article /20101206/RETAIL03/ 312069982/hyundai-plans-new-brand-strategy
Kottler, Keller, Jha, Koshy, 2007, Marketing Management
Kristen Hamlin, 2014; http://smallbusiness.chron.com/ importance-ad-slogans-31343.html
Ross Gittell, 2014, http://catalog.flatworldknowledge.com/bookhub/reader/3157?e=gittell_1.0-ch06_s02#
Trefis Team, 2014. http://www.forbes.com/sites /greatspeculations/2014/06/13/tata-motors-looks-to-improve-passenger-car-sales-by-penetrating-the-compact-segment/
Seounmi Youn, 2001, http://list.msu.edu/cgi-bin/wa?A3=ind0209c&L=AEJMC&E =0&P=3326464&B=…_&T=text%2Fplain;%20charset=us-ascii
Strategy & Business. February 26, 2013. http://www.strategy-business.com/article/00162?pg=all