Does Hyundai Really Want to Sell the Genesis Sedan?

[Mark_888]

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.

Please advise this forum as to how many additional Genesis sedans you think Hyundai could sell if they advertised more, and how much you propose to spend on the Genesis advertising. Then divide the cost of the advertising by the number of additional unit sales anticipated and tell me how much that is per car.

Regarding why Hyundai did not mention which car was awarded Car of the Year, they don't want people to know. They want prospective Camry, Accord, Civic, etc buyers to get their curiosity peeked by that claim and then visit a Hyundai dealer and look at a Sonata, etc. Relatively few people are in the market for a car like the Genesis.

 

[RogerB]

Please advise this forum as to how many additional Genesis sedans you think Hyundai could sell if they advertised more, and how much you propose to spend on the Genesis advertising. Then divide the cost of the advertising by the number of additional unit sales anticipated and tell me how much that is per car.

Regarding why Hyundai did not mention which car was awarded Car of the Year, they don't want people to know. They want prospective Camry, Accord, Civic, etc buyers to get their curiosity peeked by that claim and then visit a Hyundai dealer and look at a Sonata, etc. Relatively few people are in the market for a car like the Genesis.

Your request is silly. Of course I can't give you precise figures. But there is an established relationship between advertising and sales. My point here is not a simple restatement that they are failing to advertise the Genesis. My point is they seem to be deliberately pretending it does not exist!

I think one of the segments of the population where Hyundai would find most response is people like me. I drove Buicks for years. People who already drive BMWs and the like are not going to switch to Genesis even if Genesis compares favourably with them. Part of the enjoyment of driving overpriced European cars is showing off to others that you can afford a bit of recognized luxury and performance. But the market for Buicks, Cadillacs, Chryslers, etc. is soft. I see the Buick Lacrosse heavily advertised everywhere I turn. Even though Genesis may be a better car that the Lacrosse, this is where the competition for Genesis is. Genesis is losing these potential buyers by default.

 

[Mark_888]

Your request is silly. Of course I can't give you precise figures. But there is an established relationship between advertising and sales. My point here is not a simple restatement that they are failing to advertise the Genesis. My point is they seem to be deliberately pretending it does not exist!

I think one of the segments of the population where Hyundai would find most response is people like me. I drove Buicks for years. People who already drive BMWs and the like are not going to switch to Genesis even if Genesis compares favourably with them. Part of the enjoyment of driving overpriced European cars is showing off to others that you can afford a bit of recognized luxury and performance. But the market for Buicks, Cadillacs, Chryslers, etc. is soft. I see the Buick Lacrosse heavily advertised everywhere I turn. Even though Genesis may be a better car that the Lacrosse, this is where the competition for Genesis is. Genesis is losing these potential buyers by default.

I don't recall asking for precise numbers. Just try some numbers out and do the math. I am not sure how many they are selling now, but I think it was 1000 sedans per month (maybe higher for 2010). So if they increased sales by 300 units per month (a rather optimistic number) with more advertising, then that would be 3600 additional units sold per year. If they bought one 30 second Super Bowl Commercial, that would be about $3 million, so it would be $833 per additional car sold. But I don't think you are satisfied with just one commercial (note that Hyundai did purchase a Super bowl commercial for the Genesis sedan and another one for the coupe in 2009) so I am guessing you want them to spend closer to $5000 per additional vehicle sold. Advertising is not free. Hyundai did spend quite a lot advertising the Genesis in its first model year for the US, just like Buick is doing in the first model year of the new Lacrosse. Don't expect Buick to continue to advertise the Lacrosse at that same pace forever.

The Buick Lacrosse prices start at $27,085 which is about $6,000 less than the Genesis base price (very few base price Genesis cars are sold). And GM and its dealers are giving rather large price and financing incentives these days, so the actual difference in price is probably more, and one could expect Buick to sell a much higher number of units at that price point (even with options added).

 

[RogerB]

I don't recall asking for precise numbers. Just try some numbers out and do the math. I am not sure how many they are selling now, but I think it was 1000 sedans per month (maybe higher for 2010). So if they increased sales by 300 units per month (a rather optimistic number) with more advertising, then that would be 3600 additional units sold per year. If they bought one 30 second Super Bowl Commercial, that would be about $3 million, so it would be $833 per additional car sold. But I don't think you are satisfied with just one commercial (note that Hyundai did purchase a Super bowl commercial for the Genesis sedan and another one for the coupe in 2009) so I am guessing you want them to spend closer to $5000 per additional vehicle sold. Advertising is not free.

The Buick Lacrosse prices start at $27,085 which is about $6,000 less than the Genesis base price (very few base price Genesis cars are sold). And GM and its dealers are giving rather large price and financing incentives these days, so the actual difference in price is probably more, and one could expect Buick to sell a much higher number of units at that price point (even with options added).

Maybe someone here has more time on their hands than I have and can look into this. My impression is that the Lacrosse sells for more than that here in Canada. But what matters is not the precise figures. It is that Hyundai is not going after their natural source of buyers. Genesis remains largely unknown by the general public. Buick is an established name. Hyundai's need to advertise is therefore greater than Buick's yet they are not only not advertising, they seem to be hiding the very existence of the Genesis.

 

[Mark_888]

Maybe someone here has more time on their hands than I have and can look into this. My impression is that the Lacrosse sells for more than that here in Canada. But what matters is not the precise figures. It is that Hyundai is not going after their natural source of buyers. Genesis remains largely unknown by the general public. Buick is an established name. Hyundai's need to advertise is therefore greater than Buick's yet they are not only not advertising, they seem to be hiding the very existence of the Genesis.

The price of the Lacrosse is exactly as I stated above in the US. Obviously there are some optional packages, just like the Genesis, but it looks to me like the Lacrosse is going for about $5,000 less than the Genesis, so they can expect to sell a lot more cars, and more advertising is justified.

Hyundai Motor America is extremely well respected for the their marketing efforts and have out performed all other auto makers in the very tough economic downturn. So if you think you know more about marketing than they do, maybe you should apply for a job there?

Here are some links that might guide you as to how others think HMA management is doing:

John Krafcik, president and CEO of Hyundai Motor America, received the 2010 Distinguished Service Award from the Automotive Hall of Fame:
http://www.hyundaibuzz.com/2010/01/hyundai-motor-america-president-wins-service-award/

HYUNDAI MOTOR AMERICA MARKETING VP JOEL EWANICK NAMED BRANDWEEK 2009 "GRAND MARKETER OF THE YEAR":
http://www.pressreleasepoint.com/hy...ed-brandweek-2009-quotgrand-marketer-yearquot

 

[GripperDon]

888 Why so nasty to Roger? He very pleasantly stated a position and you berate him? You seem very defensive of Hyundai are you affiliated with them in some way?

 

[Mark_888]

888 Why so nasty to Roger? He very pleasantly stated a position and you berate him? You seem very defensive of Hyundai are you affiliated with them in some way?

No, I am not associated with Hyundai. I am almost as miffed as you are that they will not provide a 2010 suspension upgrade kit even if I pay for it.

I am not berating Roger, although I am questioning some of the things he has said (sort of like Roger berating Hyundai marketing executives). Given what the executives at HMA have done with Hyundai in the last few years, I don't think one should second guess their marketing skills unless those doing the criticizing really know what they are talking about.

If Roger just wants to know why they don't spend boatloads of money on Genesis advertising (even though they did spend boatloads in the first year), then he should be willing to at least listen to those trying to help him understand.

But as I said before, being secure in my own shoes, I don't really don't care if the Genesis becomes a popular car. Certainly, it is in my interest for Hyundai to do well (at least while I own one), but whether the Genesis does well is not a big concern for me and I enjoy the uniqueness of the car.

 

[wallymn]

Your request is silly. Of course I can't give you precise figures. But there is an established relationship between advertising and sales. My point here is not a simple restatement that they are failing to advertise the Genesis. My point is they seem to be deliberately pretending it does not exist!

I think one of the segments of the population where Hyundai would find most response is people like me. I drove Buicks for years. People who already drive BMWs and the like are not going to switch to Genesis even if Genesis compares favourably with them. Part of the enjoyment of driving overpriced European cars is showing off to others that you can afford a bit of recognized luxury and performance. But the market for Buicks, Cadillacs, Chryslers, etc. is soft. I see the Buick Lacrosse heavily advertised everywhere I turn. Even though Genesis may be a better car that the Lacrosse, this is where the competition for Genesis is. Genesis is losing these potential buyers by default.

Names and product have been changed to protect the stupid...

6 years ago the company I work for was launching a new product, Marketing put together a plan based on sales goals around 100,000 units a year.
Marketing had requested X dollars to fund a campaign to meet those target sales.
As an engineer I was involved only to be aware of how the product would be sold. However it was clear that 90% of the sales were assumed to go to a market which didn't exist. Once that was exposed. Marketing's budget was altered to reflect the sales goals.

Why do I think this applies here?

Genesis , if it were the sales leader in the category, would sell less than 20% of the Sonata. Because the Market is much much smaller.

If Sonata leads it's market it is a 2.2 million unit market, Hyundai could see sales of 300-400K units

If Genesis leads it's market it is a 77,000 unit market, Hyundai could see sales of 10-15K unites.
*Based on WSJ 2009 unit sales , Sonata in the Mid-Size and Genesis in the Large-size segment of sedan sales.

Lets assume each Genesis unit returns 2.5k of profit (7.5% on 33k base price)

The Sonata returns 1k (5% on 20k base price).

The market and therefor the marketing dollars should be 14 times larger for the Sonata based on market value to Hyundai.....

Based on that assumption. 14 to 1, It seems Hyundai is spending the dollars.

 

[RogerB]

Hmmm, well, if we can only speak up once we have become an expert, democracy would not be in a very good condition. Beware the tyranny of the experts. I can see that Hyundai have been doing a lot right with most of its cars. My remarks are confined to Genesis.

Just not failing in its introduction of the Genesis is not all that noteworthy. They seem to have modest expectations for Genesis sales. Not surprisingly, Hyundai have managed to live down to these expectations. Where do they think real sales growth for the Genesis will be found? They must know that no established upscale car owners are going to switch to a Hyundai product. The numbers of Sonata owners who will trade up to a Genesis is limited. IMO they can't afford to ignore current owners of Buicks, Chryslers, etc as a source of future sales because, like it or not, this is where growth potential lies. As I write this, CTV is presenting the Olympics. Once again, there is the Buick for the umpteenth time impinging on our consciousness. Once again, Genesis is missing in action.

 

[sandy]

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.

Roger, I would agree that you are out of touch with the realities of marketing (as I'm sure I am having retired from the ad agency business 20 years ago)

And while I sometimes can't remember what I did an hour ago, I do remember the principles of marketing I practiced for so many years.
To try to answer your question without repeating myself, please re-read my posts #4, #15 and #19.

Accept the fact that marketing dollars are finite and need to be allocated
against potential. Advertising budgets are not developed in a vacuum. The budget for the Genesis comes from the same pool as the budgets for the new Sonata, Tuscon and host of other new product introductions scheduled for the near term...as well as other volume brands like the Elantra etc. The
$$$ pool is only so deep.

It's that simple.


i

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[VivienM]

The other thing is, Canada and the US are different.

As far as I can tell, the Genesis sales in Canada meet expectations. About 100/month. They were aiming for 1000/year.

It's worth noting that they cut a lot of options for 2010, too, in Canada: no V8 without tech, two fewer colours, etc. Whereas the Americans got an additional premium with nav trim (which means 4 V6 variants, right?). No doubt to make inventory management easier.

Honestly, I think the Genesis is about as advertised as any other $40K+ car. I don't see Infiniti/Audi/etc ads all over the place. I see Lincoln ads... on American TV.

Genesis, and I probably already said this a few months ago further up on this thread, WAS advertised on globeandmail.com extensively last calendar year. That seems to me like a better place to advertise a $45K car...

Yes, the Buick LaCrosse is everywhere. But:
- it also starts at about $31-32K (CAD). Genesis is $46.5K for what I assume is the most common configuration.
- Pontiac/Buick/GMC dealers must be HURTING (Pontiac is dead, so they've got no Canada-friendly small cars anymore, and really, they have trucks, GMC Terrain, and the LaCrosse. That's it.). They need to sell SOMETHING to survive. Hyundai dealers aren't that desperate...
- it's FWD/AWD, which is far easier to sell in a wintery market than a RWD car

 

[Genesis Luver]

The Genesis was heavily advertised in it introduction year during the Superbowl broadcast. I believe that was before it was named North American Car of the Year.

 

[Mark_888]

The Genesis was heavily advertised in it introduction year during the Superbowl broadcast. I believe that was before it was named North American Car of the Year.

Hyundai purchased two 30-second commercials for the Genesis in the January 2009 Super Bowl (one for sedan and one for coupe) at a total cost of $6 million (not including production cost of the commercial).

Hyundai also had several other commercials in both the 2009 and 2010 Super Bowl, some of which discussed the Hyundai Assurance plan, which applies to all Hyundai vehicles (and where the Genesis was briefly pictured along with other vehicles).

It amazes me how some are criticizing the marketing skills of Hyundai Marketing VP Joel Ewanick who was named Brandweek 2009 "GRAND MARKETER OF THE YEAR":
http://www.pressreleasepoint.com/hy...ed-brandweek-2009-quotgrand-marketer-yearquot

John Krafcik, president and CEO of Hyundai Motor America, received the 2010 Distinguished Service Award from the Automotive Hall of Fame. Just recently Krafcik was being strongly considered (in the final 3 per knowledgeable sources) as the new CEO for GM, but told them he was not interested.

 

[RogerB]

It amazes me how some are criticizing the marketing skills of Hyundai Marketing VP Joel Ewanick who was named Brandweek 2009 "GRAND MARKETER OF THE YEAR":
http://www.pressreleasepoint.com/hy...ed-brandweek-2009-quotgrand-marketer-yearquot

John Krafcik, president and CEO of Hyundai Motor America, received the 2010 Distinguished Service Award from the Automotive Hall of Fame. Just recently Krafcik was being strongly considered (in the final 3 per knowledgeable sources) as the new CEO for GM, but told them he was not interested.

I think this is getting repetitive. My post #29 above answered this point.

 

[SCVDon]

Don't forget the WE are bailing out GM and so WE are paying for their ads. Hyundai has to come up with the $'s out of their own pockets.

 

[Mark_888]

I think this is getting repetitive. My post #29 above answered this point.

Post #29 of this thread didn't "answer" anything.

 

[nb_mike]

Everyday on my way home from work I drive by a LARGE billboard with a black Genesis like mine and it has been there for months,so they advertising but I think TV is too expensive for them and still keep prices down. Word of mouth works great too.

 

[RogerB]

Post #29 of this thread didn't "answer" anything.

You mean you didn't understand the answer. You keep talking about how clever Hyundai marketing is overall. I am talking about just the marketing of the Genesis.

 

[YEH]

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

Otoh, Genesis ads appear ad nauseum in auto periodicals (Motor Trend, Car & Driver, etc.) and on autosites on the net.

If Genesis leads it's market it is a 77,000 unit market, Hyundai could see sales of 10-15K unites.
*Based on WSJ 2009 unit sales , Sonata in the Mid-Size and Genesis in the Large-size segment of sedan sales.

The market and therefor the marketing dollars should be 14 times larger for the Sonata based on market value to Hyundai.....

Based on that assumption. 14 to 1, It seems Hyundai is spending the dollars.

Actually, in the Genesis' segment - mid-sized, luxury import sedans, the ceiling in sales is more like 40-45k a year (E Class).

Just not failing in its introduction of the Genesis is not all that noteworthy. They seem to have modest expectations for Genesis sales. Not surprisingly, Hyundai have managed to live down to these expectations. Where do they think real sales growth for the Genesis will be found?

The Genesis sedan is outselling the Lexus GS, Infiniti M and Audi A6 by healthy margins.

One could very well ask where all the advertising for those models are considering their weak sales figures.

Basically, what Hyundai is doing w/ regard to advertising is on par w/ the luxury segment.

Hyundai likely will do another advertising bkitz when the refreshed Genesis launches, altho a national TV campaign is probably out of the question.

 

[Hghwy52]

The Genesis sedan is outselling the Lexus GS, Infiniti M and Audi A6 by healthy margins.

The GS and A6 will have redesigns out later this year or early next year. The Infinity M has a redesign out this spring. If sales don't dramatically improve with the new models then they will be in trouble.