Does Hyundai Really Want to Sell the Genesis Sedan?

[RogerB]

Okay, this has been bugging me for a while now. How come Hyundai don't advertise the Genesis more? I see commercials from time to time on TV advertising Hyundais. There may be a brief flash of the Genesis sedan but nothing is really said about it. Of course I don't watch much commercial TV so I may be missing some ads. But in the newspaper I have seen whole page advertisements of Hyundai cars without a single picture or reference to the Genesis. Here we have a car that won dozens of awards in 2009 including Canadian Car of the Year and North American Car of the Year. It would be so easy to list all that in their advertising. It is an impressive beginning! Now, the awards are getting old and of diminishing value. Don't the Hyundai people want to sell Genesis cars? We wouldn't need threads on this board asking if we have seen other Genesis cars if Hyundai just got out there and actually advertised them!

 

[VivienM]

In the Canadian context, I read in a couple of the early reviews that their goal was 1000 cars/year in sales. They seem to be selling about 100/month, so that's slightly above their (very modest) target.

They advertise like mad on globeandmail.com, btw. I've seen gazillions of Genesis ads that mentioned the Canadian Car of the Year award. I suspect they've gone with online advertising instead of, say, TV because TV is too costly given their very limited sales ambitions...

 

[RogerB]

Ah well, I subscribe to the paper Globe and Mail so never read them at their site. Now my question is: why are their sales targets so low?

BTW Pathway has rented a site at Place d'Orléans. They seem to have one of every Hyundai model on show. The Genesis sedan is out in the mall in front of the store for extra visibility. But I suspect that is Pathway's initiative, rather than Hyundai's.

 

[sandy]

Okay, this has been bugging me for a while now. How come Hyundai don't advertise the Genesis more? I see commercials from time to time on TV advertising Hyundais. There may be a brief flash of the Genesis sedan but nothing is really said about it. Of course I don't watch much commercial TV so I may be missing some ads. But in the newspaper I have seen whole page advertisements of Hyundai cars without a single picture or reference to the Genesis. Here we have a car that won dozens of awards in 2009 including Canadian Car of the Year and North American Car of the Year. It would be so easy to list all that in their advertising. It is an impressive beginning! Now, the awards are getting old and of diminishing value. Don't the Hyundai people want to sell Genesis cars? We wouldn't need threads on this board asking if we have seen other Genesis cars if Hyundai just got out there and actually advertised them!

You have to consider where the Genesis fits in Hyundai's overall marketing plan. Volume models like Sonata, Elantra, etc are the companies bread and butter and it's against these models advertising dollars (which are finite) are most likely concentrated

Like many "new products", advertisng for the Genesis was heavily concentrated during its introduction, late 2008/early 2009. While every advertiser would like to support all their children, there has to be a relationship between potential sales/profits of a model and advertising budgets. Without knowing the figures, I'm certain advertising $/unit are much higher for the Genesis than most other models in Hyundai's line-up.

The Genesis' role in the plan is to create a halo for the Hyundai BRAND. Hopefully, over time, this will contribute to improved brand perception by consumers, resulting in increased sales of the volume models, hopefully at higher and higher margins.

Actual sales of the Genesis are a nice plus over and above its main job of being an attention getter, enhancing Hyundai's image, being the basis for countless newspaper and magazine articles, etc.

2010 will be interesting in that Hyundai is introducing several new high potential models, all of which will be competing, along with the Genesis for adverftisng dollars.

 

[RogerB]

You have to consider where the Genesis fits in Hyundai's overall marketing plan. Volume models like Sonata, Elantra, etc are the companies bread and butter and it's against these models advertising dollars (which are finite) are most likely concentrated

Like many "new products", advertisng for the Genesis was heavily concentrated during its introduction, late 2008/early 2009. While every advertiser would like to support all their children, there has to be a relationship between potential sales/profits of a model and advertising budgets. Without knowing the figures, I'm certain advertising $/unit are much higher for the Genesis than most other models in Hyundai's line-up.

The Genesis' role in the plan is to create a halo for the Hyundai BRAND. Hopefully, over time, this will contribute to improved brand perception by consumers, resulting in increased sales of the volume models, hopefully at higher and higher margins.

Actual sales of the Genesis are a nice plus over and above its main job of being an attention getter, enhancing Hyundai's image, being the basis for countless newspaper and magazine articles, etc.

2010 will be interesting in that Hyundai is introducing several new high potential models, all of which will be competing, along with the Genesis for adverftisng dollars.

Thanks for your explanation. The idea that the main role of the Genesis is to enhance Hyundai's image is novel to me. I would have thought that the role of every model is to make money. If Hyundai had reacted quickly to the blizzard of rave reviews and come out with an advertising blitz, it would have sold far more Genesis than it did in my opinion. The time to strike is while the iron is hot. Any advertising they did prior to that did not have a lot of effect. Most people had never heard of the Genesis before all the glowing reviews and they still haven't thanks to lack of advertising. Also, my understanding is that upper end cars yield more profit per unit than lower end cars. Possibly, since the Genesis is being sold at far less than comparable brands, this is less true for them.

Anyway I sense a loss of sales and potential growth as a result of not advertising sufficiently. New models have to be flogged aggressively to penetrate the public's consciousness. Expending most of Hyundai's advertising budget on already well established brands may have been a mistake in my opinion.

 

[Sayantsi]

I think right now the national advertising campaign is focused on the special interest rates on its other models, so once that is done, maybe you'll see more tv ads of the Genesis. Hyundai is running a two page ad in magazines nationally now, so it is getting some pr.

Also, cars that sell well don't get marketed as much - they don't need it. From what I've seen, the Genesis sedan is still selling strongly while the coupes are piling up.

 

[YEH]

Hyundai did have an advertising blitz when they launched the sedan and coupe respectively - but TV advertisement is too expensive to continue for relatively low volume models (there still are plenty Genesis advertisements in periodicals and on the net).

It's the same reason (why) we don't see (individual) commercials for the S Class, 7 Series, LS, etc., much less the Infiniti M, GS, etc.

 

[blasterguam]

Hyundai did have an advertising blitz when they launched the sedan and coupe respectively - but TV advertisement is too expensive to continue for relatively low volume models (there still are plenty Genesis advertisements in periodicals and on the net).

It's the same reason (why) we don't see (individual) commercials for the S Class, 7 Series, LS, etc., much less the Infiniti M, GS, etc.

True, and as the price of the cars goes up the demographics of those that purchase are different - for example the advertising may be much more likely to be targeted effective in Fortune magazine for a premium sedan than on TV where the mass market sedan marketing would hit the target audience. I would not expect to see near as much TV advertising for the Genesis as I would for the Elantra.

 

[GripperDon]

..."Anyway I sense a loss of sales and potential growth as a result of not advertising sufficiently. New models have to be flogged aggressively to penetrate the public's consciousness. Expending most of Hyundai's advertising budget on already well established brands may have been a mistake in my opinion.

Well said, every model must make money, period, they way things are going in Korea they will be the next GM...

 

[bjjones]

Hyundai did have an advertising blitz when they launched the sedan and coupe respectively - but TV advertisement is too expensive to continue for relatively low volume models (there still are plenty Genesis advertisements in periodicals and on the net).

It's the same reason (why) we don't see (individual) commercials for the S Class, 7 Series, LS, etc., much less the Infiniti M, GS, etc.

It's not the same because Mercedes, Lexus and BMW are established already in America as premium brands and the higher end luxury models like the Mercedes S Class, Lexus LS, and BMW 7 series are well known from reputation and previous iterations while the Genesis is a completely brand new model in the U.S that has never been offered before and many people are still unaware that Hyundai is capable of building a luxury automobile, let alone selling one.

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[wallymn]

If your Hyundai..

You are building a car above the brand.....
Your not direct competing with lux models from (bmw,lexus, mb etc)..

So your "buyer" is someone that is looking for a premium ride at a price.
That is a small enough market that on line targeted marketing makes sense.

To go cars.com, carsdirect.com, kelly bb, motortrend etc. and search on any of the models listed above, and there will be an ad for the genesis.

For this market segment it makes sense. Value shoppers do a LOT of research prior to buying. The goal of any marketing is awareness. I think the internet ads do it.

Blanket marketing would work in this segment if you were trying to build the brand , but Hyundai isn't building a brand with this car.

 

[ttsig]

If your Hyundai..
For this market segment it makes sense. Value shoppers do a LOT of research prior to buying. The goal of any marketing is awareness. I think the internet ads do it.

I think this is an excellent point. I've seen a zillion ads for the Genesis online, almost all while looking for cars and comparing cars to the Genesis, although also on sites like CNNSI. There was also a huge blitz of TV ads during NFL games last season when the vehicle was totally new to the market, although I've mostly seen generic Hyundai commercials this year.

I've seen Genesis ads in a large number of car magazines as well as a wide variety of other magazines. I feel like the car has been reasonably well advertised and most of the people I run across have seen or heard of it, even if they don't recognize it right away.

 

[YEH]

It's not the same because Mercedes, Lexus and BMW are established already in America as premium brands and the higher end luxury models like the Mercedes S Class, Lexus LS, and BMW 7 series are well known from reputation and previous iterations while the Genesis is a completely brand new model in the U.S that has never been offered before and many people are still unaware that Hyundai is capable of building a luxury automobile, let alone selling one.

It is the same in that they are low volume models and it just wouldn't be prudent financially to spend tens of millions on national TV commercials for such low volume vehicles.

Hyundai had a set budget w/ regard to advertising the Genesis sedan and they made the most of it by spending a big chunk of it on commercials during the Super Bowl and the Academy Awards (when the most eyeballs would be attached to the boob tube).

The rest, as stated above, is used on advertising in selected publications (auto, financial) and on webpages which have to do w/ autos which the Genesis competes against.

Also, even MB and BMW spend $$ advertising in nationally run commercials when they launch new models (most recently, Mercedes w/ the new E Class) - but after launch, commercials tend to broader brand advertisements.

Apparently, Hyundai spent $80 million to advertise the Genesis sedan and coupe during launch (that's a lot of sales needed to recoup that investment).

 

[RogerB]

Hmm. Evidently I don't know much about how upscale cars are marketed. I would make the following points though.

First of all, advertising at the Superbowl and the Academy Awards will reach a lot of people but these are fleeting, one time occurrences. If you want to establish a brand in people's minds, you have to hit them again and again so they remember the name of the brand. After seeing one or two commercials on one time TV shows, most people will not remember the brand. Maybe Mercedes can get away with this because the Mercedes brand is well established as a quality automobile in people's minds, even if they can't remember the name of the latest sub brand.

Yes, it will take a lot of sales to justify the expense of heavy marketing in the mass media. They won't recoup the money in one or two years. But what they should be trying to do is establish the brand over time. It will take years to recoup the advertising dollars but if their brand fails to click with the public in the first critical years, any money at all spent on advertising is money lost.

Hyundai have a particularly difficult task in marketing the Genesis. Their cars are established in people's minds as cheap and utilitarian. If they are not going to set up a separate brand for their upscale cars as has been done for Acura and Lexus, their task in changing public perception is huge and requires a correspondingly huge advertising budget.

So combine Hyundai's paltry advertising of the Genesis together with their failure to capitalize on all the early rave reviews and I fear for the success of our favourite car.

 

[sandy]

Roger - You make some good points but you are not accepting the fact there is a limit to how much a company can invest in marketing. In a previous post,you suggested starving the volume brands and over-feeding the Genesis. This would be a great idea so long as Toyota, Honda and Nissan agreed to suspend their advertising efforts for the Camry, Accord and Altima. If you accept the premise that there is a direct correlation between sales and marketing/advertising support, you can see how such a strategy could put Hyundai out of business...which is the business of making cars that appeal to a huge segment of the population, capable of generating tremendous volumes and profits. You might not want to throw that away to take a chance on a new model.

 

[YEH]

@Roger B

Hyundai has continued advertising for the Genesis - via advertisments in choice publications (such as auto publications and those that high-end income earners read - Forbes, etc.) and online where one can focus the advertising $$ better on one's potential market.

Also, let's not forget all the product placement that Hyundai did on select TV shows (such as "24", cooking shows on the Food Network).

Again, Hyundai spent $80 million to launch the Genesis sedan and coupe - really, how much do you want them to spend on what is a relatively low volume model(s)? (And that's not counting all the "free press" the Genesis got in all the auto publications - the Genesis was probably the most "talked about" model over the past year or so and the no. of times the Genesis has been mentioned in automobile message boards will bear that out.)

As for establishing the brand as being something beyond cheap and utilitarian, the launch for the next-gen Sonata and Tuscon will do more for that than what the Genesis has done thus far - which is why Hyundai is going to spend about $80 million each to launch the two.

 

[RogerB]

Roger - You make some good points but you are not accepting the fact there is a limit to how much a company can invest in marketing. In a previous post,you suggested starving the volume brands and over-feeding the Genesis. This would be a great idea so long as Toyota, Honda and Nissan agreed to suspend their advertising efforts for the Camry, Accord and Altima. If you accept the premise that there is a direct correlation between sales and marketing/advertising support, you can see how such a strategy could put Hyundai out of business...which is the business of making cars that appeal to a huge segment of the population, capable of generating tremendous volumes and profits. You might not want to throw that away to take a chance on a new model.

Does anyone know how Toyota and Honda went about advertising their Lexus and Acuras at the beginning? Did they content themselves with niche marketing? If not, remember that Lexus and Acura were not being dragged down in public perception by their more utilitarian brands.

 

[YEH]

^ That's comparing apples to oranges - totally new amd separate brand vs. a new model.

Think about this way - when was the last time you saw a national commercial for the Infiniti M or Lexus GS (both of which are flagging in sales)?

It just isn't worth the expenditure for a national TV ad campaign for such low volume sellers unless it involves a launch (when Infiniti launches the next-gen M, expect to see a no. of national TV commercials).

The same goes for the Genesis. For now, in national commercials, expect to see the Genesis only in broad-based Hyundai commercials (where the Genesis is included in the Hyundai line-up).

The next Genesis-specific national campaign will have to wait 'til the next gen Genesis is launched (or maybe when the mid-cycle refresh is done if it involves some significant changes).

 

[sandy]

Well said, every model must make money, period, they way things are going in Korea they will be the next GM...

You gotta be careful when you use words like "Every" and "period".

I'm reading about the new Lexus LFA in Dec. Motor Trend.

Some quotes:

"Toyota admits it will lose money on every LFA it will build.....the LFA is first and foremost a corporate halo car, a rolling Super Bowl ad intended to ignite passion and fire in a non-supercar brand"
.
"Who really cares if the LFA itself loses a few deca-millions in the process? What matters is that it does its part and sets the hearts and pocketbooks of would-be Lexus buyers ablaze"

I think the same strategic thinking was behind the NSX when Acura introduced it, Chrysler with the Viper, VW tried to do it with the Phaeton, and I'm sure there are others I can't think of at the moment.

I hope the Genesis will eventually be a money maker, but it's way to early to predict. I'm no expert, but from what I've read the costs of developing a brand new model run into the $$billions. So break-even and eventual profitablity are a long way off. In the meantime, the Genesis is making a significant contribution to Hyundai's overall growth.

 

[RogerB]

Sandy, I guess I am out of touch with the realities of manufacturing and selling upscale cars. Here are more examples of neglecting to include the Genesis in their selling efforts.

I have seen many Hyundai full page advertisements in our local paper. A Genesis is never featured.

Hyundai was sponsoring part of the Olympic Games. They mentioned that the Games were being brought to us by Hyundai, maker of the Canadian Car of the Year. BUT they never identified which car that was!!

Last December there was a display of Hyundai cars at a local shopping plaza. The Genesis enjoyed the distinction of sitting outside the store area in the mall itself. Today that display is still there. But there is no Genesis anywhere.

Even if I accept that Hyundai don't want to devote mass advertising dollars to the Genesis, would it kill them to at least mention the Genesis? To include it in their lineup? You don't sell cars by keeping them a secret.