47-A Price Leader Enters the Performance Leader Market

From 2008

Hyundai has announced that it will offer a luxury sedan in the U.S. market this Fall. The new model, the Genesis, purports to offer Lexus and BMW quality for a price 35% less than those competitors.

This is quite a leap for Hyundai. Its reputation in the domestic market is that of a Price Leader competitor selling primarily smaller cars. Its larger, Standard Leader, products, such as the Sonata, sell slowly in the U.S. (See the Perspective, “Why do Leaders Lead?” on StrategyStreet.com for more insight.)

The company is making a classic low-end competitor attack on this Performance Leader market. It does not claim to be as good as its competition, such as the BMW. It claims only that it is good enough to be compared to BMW and Lexus. In return, it offers a substantial discount. The company hopes to attract what it calls “non-conformist” consumers who appreciate luxury but are not concerned about the brand of luxury car they drive.

The Genesis offers all the bells and whistles of the luxury sedan category. The company is putting its warranty money where its quality mouth is. Its warranty, at five years or 60,000 miles, is far better than the four years or 50,000 miles more typical of the luxury market.

Hyundai expects that the new automobile will increase its market share and boost its brand image. If the new car is as good as its early reviews, it is likely to do both.

Posted 9/8/08

Update in 2025:

The two major Korean automobile manufacturers have now become Standard Leaders in the US automobile market. They offer a wide range of products from Price Leaders to Performance Leaders in the US market. The broad product line and growing reputation for quality are yielding market share gains for these Korean manufacturers.

Hyundai’s US market share has grown from 3% in 2008 to about 5% at the end of 2021. During the same period, Kia’s share has grown from 2% to 4.5% of the US market.  Both of these brands have struggled to get over their earlier reputation for being low end competitors. Their market shares in the Standard Leader market have grown, but slowly. In 2022 they do seem to be having success in the EV market in the US and worldwide.

Genesis is the luxury vehicle division of the South Korean vehicle manufacturer, Hyundai.  The brand was introduced in 2015 and entered the US market in late 2016, with the G80 and G90 models.  The G70 model entered the market in 2017.  All 3 Genesis models garner impressive reviews and offer outstanding value for money.  The warranty coverage on Genesis automobiles parallels that of Hyundai and Kia.  They are clearly the best in the American automobile market.

Since the Genesis brand came into its own as a standalone marque in 2016, It has been highly successful.  Sales have increased nicely, from 7000 vehicles sold in 2016 to 70,000 vehicles sold in 2024. The brand has succeeded by introducing improvements in every component of the Customer Buying Hierarchy.

– Function: first, the brand provided an upgrade pathway for Hyundai owners seeking a step up for the next automobile. The brand adopted forward-looking styling to set it apart from its more conservative competition. It offered high quality interiors with above average comfort. It emphasized advanced technology throughout the automobile. Each one of these Function innovations added a uniqueness to the brand for its customers.

– Reliability: Genesis set out to make its customers feel safe, comfortable and highly valued at every stage of the customer’s interaction with the brand. Rather than usual salespeople, Genesis introduced personal assistants to explain the brand and its benefits without sales pressure. Many of these assistants came from the hospitality industry. The brand heavily advertised its industry-best warranty. Its advertising promoted the many awards the brand received for quality, reliability, durability and customer satisfaction.

– Convenience: Genesis added impressive convenience to the purchasing experience. It introduced, and rapidly expanded, a series of standalone Genesis dealerships with high service levels. It offered to deliver automobiles to customer homes and to come to the customer’s home for service pickups. It also provided ample test drives for customers unfamiliar with the brand.

– Price: the company’s pricing strategy reflected its emphasis on customer comfort and safety. It adopted no haggle pricing with no hidden fees or add-ons. Its prices were set somewhat below those of its primary competitor, Lexus. Genesis then supported its price level by restricting availability in the US to create a sense of exclusivity and scarcity.

These coordinated Customer Buying Hierarchy innovations each contributed to the fine success of the Genesis brand. Any one of these multiple innovations might have made Genesis unique for a particular customer. Taken together, they made Genesis unique for a total of 70,000 customers.

Posted 5/28/25

Careful consideration of the Price Point products to offer in a market is an important aspect of retaining and growing core customer relationships. HERE, HERE, and HERE are three analyses that frame the issue.

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