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Introduction Kia Motors Corporation (KMC), founded in 1944 is Korea’s oldest manufacturer of motor vehicles. Today, the Corporation is part of the 4th largest automotive group in the world, having exported over 5 million cars to more than 155 countries around the world. Kia’ goal is to become a top 5 volume car brand. In order to achieve this status they must increase their market share, both fleet and retail, break through into the corporate fleet sector and sell over 100,000 cars a year. KIA has four key focus areas.
Firstly, to deliver quality cars and services so that they are recognised by the media and their customers. Secondly, to become a challenger brand through building a compelling and differentiated, yet fun and dynamic image for the Kia brand. Thirdly, to create a professional dealer network by supporting the development of their dealer partners with better facilities, better people and better processes. Finally, to deliver excellent customer experiences; by ensuring that every contact customers have with the company is enjoyable and memorable Marketing strategy
Kia’s marketing strategy is designed to answer two questions; firstly, which customers will need to be served? And how value for customers will be created? The first one will be answered through the process of segmentation and targeting and the second one through the process of differentiation and positioning. Kia uses data from surveys such as NCBS (New Car Buyers Survey) and TGI (the world’s leading provider of marketing and media surveys) to gather information about consumers, such as home, family life and attitudes, work and holidays, interests and activities, media, favourite brands and shopping, and their car.
Based on this, Kia is able to segment the market using four segmentation variables: geographic, demographic, psychographic and behavioural. Kia achieves geographic segmentation through its high-capacity plants outside Korea (headquarters), in the US, Slovakia and China. Using demographic and psychographic variables, Kia’s average age of buyers is forty, though this may slightly vary according to the model of the car. Kia is typically a male biased brand (account for 60%), however the ‘Picanto’ is the stand out model with a female bias.
In terms of income, the average middle class Kia buyer who will usually purchase the ‘Pro_cee’d’ or ‘Sorento’ earns ? 36k, while the more affluent upper middle class buyers earns over ? 43k per annum and purchases the Sedona or the ‘Sportage’. Although Kia caters to a variety of people, it could potentially expand their range of models to target the younger generations, ‘generation x’ and later ‘generation y’ as well as the lower and upper social classes. Looking at behavioural factors, Kia buyers are typically “outdoorsy”, yet consider the home and family to be central in their lives.
They place more emphasis on price but look for a good price-quality ratio. In order to differentiate themselves from other brands, KMUK have introduced a seven year warranty on all their products; being Europe’s best manufacturer-backed protection for new car buyers. This demonstrates to customers that Kia strongly believes in the quality of their products. Furthermore, Kia’s eco dynamic cars are fuel-efficient; which is a key selling point in two ways: it allows people to save money and it suggests the company is concerned about the effect of their products on the environment.
At the moment, Kia’s value proposition is ‘same for less’, as it charges lower prices for similar products over its competitors such as Ford and Vauxhall. Marketing mix Product In terms of product, after approximately 18 months of introducing a new model, Kia gives their cars a ‘face lift’ which includes interior and exterior specification changes. During the growth stage, sales start climbing quickly, so whilst Kia still employs methods to educate the market about their product, the ‘face-lift’ is their way of competing with other brands who have entered the market.
Products in the maturity stage should evolve to meet changing consumer needs. People tend to change their car every 3. 5 years and the average product life cycle of a Kia Motor is 3 years. At this point the company launches a full new product, which may also include limited edition models. This is an effective technique because customers are ready to change their cars and Kia is providing them with new options, which helps to build customer brand loyalty. During the decline stage Kia Motor’s products’ sales and profits are likely to decrease.
Since it has a variety of cars and models, it needs to be aware of the sales and profits generated by each one of its products, so that if one product is generating a loss it is not hurting the profits being generated by the other products. At this point, they could take various measures to maintain a balanced product mix by either maintaining or withdrawing the product generating the greatest losses. Price In terms of price, Kia motors range from ? 6,995 for the Picanto up to ? 23,005 for the Sorento, with all their other models ranging between these two values.
Therefore potential customers have the choice to select the Kia model that best suits their age and life cycle stage. As an extension strategy to this, some Kia models are classified in a number of grades and are therefore given different prices. For example, the Picanto has three different grades, grade 1 being the entry level price with the standard specification features and grade 3 being the highest with the most advanced specification features. This gives customers more choice in terms of their budgets and enables them to select the car that meets their specific needs.
Furthermore, Kia adopts a different pricing strategy at each stage of the PLC. When the car is first introduced the price will be the highest, after this point the company analyses the market response and introduce promotions and offers accordingly. However, in terms of the market, Kia uses the penetration pricing strategy to enter the market quickly and deeply, thereby attracting a large number of buyers relative to its competitors. Place Currently Kia has 166 dealerships across the UK from which it distributes its products.
Although this is a relatively high number, KMUK have plans to expand to over 170 sites and target key areas which are not currently being represented, such as Guildford and Surrey. Dealerships can be an opportunity as well as a threat. Customers who visit dealerships are usually strong prospects in the final stage of making their decision. If they receive exceptional customer service and have a good customer experience at the dealership, the customer will be more likely to purchase the product but if they do not, dealerships become a threat to the company and jeopardise the brand image.
In light of this, Kia should ensure that requests such as booking a test drive are followed up by dealerships via confirmation emails and there after sales department get feedback from customers regarding their dealership experience. Promotion In the introduction stage of the PLC (in which the product is first distributed and made available for purchase) Kia spends a relatively large amount of money on promotion to inform consumers of the new product. Recently Kia has focused on eDM (electronic digital marketing) as a key marketing strategy.
They can inform or contact their customers relatively cheaply and mass mail all the current or prospective customers on their database using eDM. This is a very effective and modern way of marketing which has been adopted by many brands as it is a much more cost effective and efficient method than the traditional method of posting brochures or leaflets due to the printing and postage costs. Additionally, the Kia website and dealerships are key locations for promoting and advertising new products.
The eDM and the website have specific CTA (calls to action) which are very effective as they constantly provide customers with quick links to pages such as ‘book a test drive’ or ‘order a brochure’, encouraging them to take more steps towards purchasing the product. E-marketing is very flexible as it allows modifications to be made very quickly and at a low cost, as and when Kia needs to do so. However, this may come across a less personal means of attracting customers as emails can be easily discarded or marked as spam. Currently, Kia is launching a new version of their ‘Picanto’ model.
Although this model has typically been purchased by the older generation and perceived as a more female biased car, product managers at Kia have been working to ‘modify the market’ by reaching younger consumers through social networking widgets such as Facebook and YouTube as well as making the new Picanto look less feminine by adding new features such as the infamous Kia tiger grill nose. ? Branding Kia has built a strong brand by introducing a unique 7 year warranty on any of their vehicles which can be transferred from owner to owner.
This is four years more warranty than most automotive companies; it places them as the leader in this area and is more appealing to customers as they will perceive the product to be more reliable. A strong brand equity has been built along the years based on the slogan “power to surprise”. After establishing profitable customer relationships and gaining high market share globally, Kia has dropped their slogan as they have accomplished brand recognition and can be identified solely through their logo.
Kia is actively involved with major sporting events around the world, sponsoring the renowned Australian Open and 2010 FIFA World Cup as well as individuals such as tennis sensation Rafael Nadal. The Oval cricket ground is now sponsored by Kia and has been officially renamed “The Kia Oval”. Co-branding with such a well recognised landmark that has been part of the community for over 150 years is highly beneficial to Kia as it increases awareness of their brand.
The Kia Oval shows a great deal of corporate social responsibility by running numerous community projects and activities as well as striving to minimise their carbon footprint wherever possible. The clear association of Kia with The Kia Oval and other events has a positive impact on their brand image. Building direct customer relationships Kia has compiled a customer database from details that people have entered on the company website, for example when requesting a brochure. They also purchase details of customers or prospective customers from dealerships or data providers such as the DVLA.
They use their database to design a highly effective and efficient customer-driven strategy and mix by monitoring individuals in various areas such as their lifecycle stage, and posting or emailing them information about their products and promotions. The company uses direct marketing to increase its sales. Ways in which they do this include direct-mail marketing either through post or email, for example Kia have a magazine named “Eureka” that is mails to approximately 80,000 existing Kia owners in order to maintain their existing customer relationships and loyalty.
However, Kia does not send magazines to all the people on its database, although this remains a weakness the company is trying to address this by launching an “ibrochure” online, this is an interactive and electronic alternative to a magazine which can be accessed on various devices such as smart phones and iPads. Online marketing includes the Kia website, face-to-face selling is primarily at dealerships and social networking consists of Facebook and YouTube. Such a wide scope of direct marketing methods is effective as it targets people through a number hannels and increases the likelihood of sales. ? Additional Recommendations In terms of product, one of the recommendations that could be made is related to the issue of quality; right now Kia’s quality is good but it could be greatly improved. The company produces large numbers of cars from their factories and this huge number could help contribute to the improvement of the quality of their cars by allowing them to afford better quality raw materials without having to inflate the prices of their cars.
Another aspect which Kia could change is the range of cars it offers. Although the Sorento and Sportage are popular products, most of Kia’s cars are designed for functionality and family use. It would be to their advantage to invest in the research and development of new luxury cars and even cheaper cars so that the company will cover a wider range of vehicles and cater to a broader audience. The production and distribution rate of certain models, particularly the Sportage have experienced difficulty in meeting customer demand therefore reducing the number of sales.
Therefore, Kia should adopt a strategy that would produce and deliver the models according to their popularity. References 1. Wells C. , 2011. Discussion on the marketing strategy and plan of Kia [conversation] (Personal communication, 11th April 2011) 2. Kia Motors Corporation- Company Profile, Information, Business Description, History, Background Information on Kia Motors Corporation [online] Available at: http://www. referenceforbusiness. com/history2/74/Kia-Motors-Corporation. html [Accessed 19 April 2011] 3.
Kia Motors, 2011. Current Kia brand audience definition [leaflet] 4. New York: Monthly Review Press, 1993. “Kia Motors in Positive Mood on Rising Sales,’ South China Morning Post (Web Edition), April 14, 2011 5. [Accessed 18 April 2011] 6. Corporate Social Responsibility [online] Available at: ; http://www. kiaoval. com/about/csr; [Accessed at 10 May 2011] 7. Sports Sponsorships. [online] Available at: http://www. kia. co. uk/About-Kia/Sport%20Sponsorship. aspx [Accessed 10 May 2011]