Ken’s Take: In marketing, there’s a concept know as “product augmentation” — adding features and services to a “core product” in order to deliver more differentiating benefits to target customers. Hyundai seems to have hit the target with its assurance program.
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Excerpted from Brandchannel, “Marketing Strategies that Build Value” by Barry Silverstein, April 6, 2009
Value building is not a new concept. In good times and bad, smart brand marketers have always recognized the need to build value and differentiate—to make their brands a little better than competitors by adding a new feature, creating a special promotion or forging a unique alliance with another brand.
What’s different today is the targeted relevance of value building. Faced with a protracted global economic recession, established brands are searching for ways to add maximum value without cheapening their image or undermining profits. Some brands are out-smarting and out-performing their competitors because of value-building strategies.
One breakthrough example of value building is occurring in, of all places, the automotive industry. While most car manufacturers and dealers are slashing prices and offering deep discounts, one car maker is leveraging the impact of the economy on consumers by offering something simple yet powerful and timely: peace of mind.
In early 2009, the Korean auto company Hyundai introduced a program called Hyundai Assurance in the US market. It made a bold promise: “Finance or lease any new Hyundai, and if in the next year you lose your income, we’ll let you return it.” Hyundai recently enhanced the offer, renamed Hyundai Assurance Plus: “If you lose your income, we’ll make your payments for 3 months while you get back on your feet, and if that’s not enough time to work things out, you can return the car with no impact on your credit.”
Hyundai built additional value into Hyundai Assurance by broadly defining the ways in which loss of income might occur. Hyundai included the following “life-changing events” in its promise: involuntary unemployment, physical disability, loss of driver’s license due to medical impairment, international employment transfer, self-employed personal bankruptcy and accidental death. Obviously the company thought carefully about the current economic environment and consumers’ potential misfortunes.
Ironically, when Hyundai cars first entered the marketplace, they were not well regarded; in fact, Hyundai was perceived as a lower-quality brand in its early days. But following in the footsteps of the Japanese automakers, Hyundai kept making its cars better and better. Ten years ago, Hyundai stunned the industry by introducing the best automobile warranty in the US—a “safety net” that gave customers the confidence they needed to purchase a vehicle from Hyundai. Hyundai Assurance is essentially a thoughtful extension of that original value-building strategy.
In January 2009, after the introduction of Hyundai Assurance, Hyundai’s sales were up more than 14 percent over January 2008. “Hyundai had the largest sales increase of any automaker, and it was one of only three with any increase at all,” reported CNNMoney.com.
In March 2009, Hyundai started offering low-rate loans on three car brands, in addition to cash-back incentives. Dave Zuchowski, vice president of sales for Hyundai Motor America, told Automotive News, “We’re looking for [Hyundai] Assurance to drive traffic and then the new rebates to help close the deals” (“Hyundai Piles On Incentives,” March 9, 2009).
Another way brands can practice value building is to promote exclusivity and offer consumers something of unique value for a limited time. The recent introduction of the 70th Anniversary Platinum Edition of the Disney movie Pinocchio typifies the category.
The Pinocchio release is just the latest in a series of Disney Platinum Editions—part of a larger value-building strategy by Disney to release original movies from the “Disney vault” for limited time periods, thus increasing their perceived value.
Disney is already one of the world’s most recognized brands, so why do they need to issue Platinum Editions? Because Platinum Editions reinforce the image of the brand. Once the limited-release time period is over, the Platinum Edition movies are no longer available through traditional retail channels—they become “out of print” collector’s editions—and the Disney brand maintains its aura of exclusivity.
A third path to value building is more conventional but just as effective: using add-ons that enhance the value of a brand and reinforce the brand purchase decision. Apple’s iPhone stands out in this area. While it was a legitimate breakthrough brand in its own right, the iPhone was high priced and, by some standards, a risky and unproven technology. Apple rapidly overcame those early objections by opening up the iPhone to developers. The result was an iPhone “App Store” with thousands of applications for the iPhone, some of them free. In March 2008, more than 100,000 developers had downloaded the iPhone Software Development Kit in a period of just four days. By the end of 2008, Apple had recorded over 100 million application downloads.
Still, Apple succeeded in demonstrating that it was once again a pioneering technology brand, and that the iPhone was an added-value platform—one that could provide a mind-numbing quantity of applications unlike any other communications device on the market.
These brand marketers know that value building is an important means of keeping their brands fit—and creating strong bonds with customers who are seeking the best value…especially in these economic times.
Edit by NRV
Full article: http://www.brandchannel.com/start1.asp?fa_id=472
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