INTERNATIONAL MARKETING – A CASE STUDY OF HYUNDAI

Executive Summary

Joint venture is one of the easiest ways to expand the business in the international market. In this particular study, a discussion has been made on the international market research of the Hyundai organization, as Hyundai Motor expand its business in the Chinese market with the help of a joint venture. Macro environment of China has been analyzed in detail using PESTLE framework. Furthermore, the emphasis has been given on the recognition of the foreign target market for Hyundai using Segmentation, Targeting, and Positioning. In the later part, an elaborate description has been given on the international strategy of market expansion used by Hyundai using Porter’s generic model elaborately. It will include several opportunities for expanding marketing activities in China with a detailed discussion on the 7ps of marketing mix of the Hyundai organization.

Introduction

This research tries to focus on the company Hyundai that wants to expand its business in China with the help of a joint venture and is trying to expand on an international level. For this international marketing, knowledge is very crucial. International marketing is an application where principles of marketing will not work alone somehow how one has to gain knowledge about marketing on a global ranking, keeping world wide scale in mind. It is a strategy which is adopted by entrepreneurs who want to sell or purchase their products with foreign markets. At the same time it can be stated as – international marketing helps the company to expand its business presence in global markets (Morgan et al., 2018). It is important because the huge commitment by Hyundai requires more effort while allocating its business in the world forum. In China Hyundai can’t establish its own business in a different country which is unknown to them. One needs support and source both to expand a company. Every big organization wants to expand itself internationally so they use international business software to stimulate the information from the software which will help the company to rise on a global basis. The researcher aims this case study paper to use different techniques that are used to overcome day-to-day problems and creativity with innovative ideas that are vividly described.

Company Background

Hyundai is an automobile company that was established on 29th December 1967 and the founder of the Hyundai Company was Chung-Ju-Yung. The headquarters is in Seoul, South Korea. At first, the founder constructed this engineering company around 1947, and later it was established. According to the reports, the very first model of Hyundai was Cortina and this model came into the market in the year 1968 with a partnership of another company that is Ford Motor Company (HYUNDAI MOTORS. 2020). This is very obvious that a company cannot establish its factory at the very first stage and later they also develop their car with the help of George Turnbull, who was the managing director of Austin Morris. Again another five other car engineers of British who were involved in the designing of the body of the car and the inner engineering parts helped them, with this experience. Later in 1975 the company released its first car named Pony was iconic with advanced technology in which Mitsubishi Motors was included. Lately, this company started exporting their products to other countries.

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In the first stage, the company started exporting its products in Europe and then to the United States of America. One model that gained fame in the United States was with the feature of the front-wheel-drive system. This makes the company excel worldwide and also let them win awards for one of the best selling cars in that time. The first car which was launched, Cortina, was replaced by a steeler, rear-wheel-drive added with luxurious facilities like air conditioning, comfortable seats, electric locks, and stylish outlook. The company soon began to launch more and more advanced products hence the company broadened its business in Germany, India, Japan as well as in Korea. The chairman of the company is Chung Mong-Koo with 75000 employees worldwide. The vehicle of Hyundai is sold in 193 countries along with 6000 leaderships and showrooms in this world.

HYUNDAI

PART 1

International Market Research Using PESTLE

PESTLE analysis is explained in terms of economic, social environment, political, and             technological factors. To determine the internal market expansion theory

  • Political- The political background is the biggest obstacle and at the same time the largest scope to stop the growth and to expand the growth respectively. The political agenda will help a company to expand in its country, to explore its products (Ibeh et al., 2019). Overall the profit is dependent on the political aspects of a country. Take an example of a recent incident when Facebook was blocked in Iran with name and North Korea due to the political agenda. Similarly, in China, the Hyundai Company wants to expand along with the joint venture. The fastest-growing company of Beijing Hyundai Motor Company since 2002 along with the joint venture of Korea’s Hyundai motor company, the government is supporting them both politically and in an administrative way. The success which Beijing Hyundai motor company got can be stated as the late market entry. Hyundai the brand name was itself weak to explore and at the same time the position was also weak relative with Chinese Hyundai market factors. Hence knowing all these factors the company was allowed to grow rapidly due to a supportive political environment.
  • Economic- Today in the 21st century China is one of the largest economically powerful countries to expand Hyundai. To launch the company in China it can be risky and beneficial also (Song et al., 2017). However it’s about the joint venture by engaging too much capital totally in a new company is no less than a big risk. Still, risk is a factor of both positive and negative which works in the market instrument. In 2018 demonetization will surely show some effect towards the establishment of Hyundai in China. Still, South Korea automobile companies find its way.
  • Social- Social pressure can also affect millions of ways to help in the growth of this company. These products will be used locally and the feedback provided will be acting as the key role for the upliftment and in the downfall of the company. If Hyundai wants to grow in China then the company has to translate its interface which will be not enough then needed to rebrand the existing brand.
  • Technological- On a fundamental basis technology is the biggest factor needed to explore its business not only in China but worldwide. The people of China should have the knowledge to access the new Brand technology released. It depends on how actively and quickly their innovative ways will help the company Hyundai to cooperate with the local customers.
  • Environment- The environment is considered as the key to profit and loss both. The company should choose its weapons according to the comfort zones of the environment in which it has been set up. Most of the citizens of China like creative and innovative products to explore their journey so that the environment will support the company to innovate more products.
  • Legal- The country China has strict laws to protect in the interference from outsiders. From the recent data which was available from the department of industrial policy and promotion clarify in increasing filing trademarks and copyright (Düerkop and Huth, 2017). This can attract investments from foreign countries, now it is not in a position of risk. However, recently the Chinese government has allowed investors to expand their business in its country and they have removed the complicated matters from it but still, the regulations of country China are not clearly perplexed and cannot be understood properly.

Identification of Foreign Target Markets using STP

STP stands for segmentation targeting and positioning. Today in the 21st-century era STP is a strategic way through which tools in the market can be understood. It is a model through which the marketing system is practiced; it ranks as one of the second marketing models.

Segmentation- The following segmentation will help to understand the core meaning of the research paper which comes under STP. It is further divided into four parts-

Demographic Segmentation- Chinese people’s choices differ from generation to generation and according to gender (Li et al., 2018). People who are young generation choose to be stylish and they depend upon innovative and new techniques Hyundai should focus upon youngsters and other aged people while manufacturing their products.

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Geographic Segmentation- This explains when one customer builds a relationship with another customer and the chain goes on after grouping the individuals. It will help one to segregate their products concerning regions and market size.

Behavioral Segmentation- The behavior of the customer differs and the way of interaction leads to better service. Many customers in China are not aware of purchasing behavior but the brand Hyundai should focus upon it and try to interact with every customer similarly.

Customer Journey-Based Segmentation- It does not matter whether the buyer is interested to buy the product or have just arrived to take a look, the company must give its best policy to describe each of the product well and must not differentiate the journey of the customer in its showroom by purchasing mind or just having an idea about the product (Bolon et al., 2018).

Targeting- Targeting customers would help to achieve profit in China. It is better to depend on the green environment while planning the development of the automotive industry in China. Chinese people rely on a lightweight transport system where fuel consumption and new and innovative techniques are involved (Zhang et al., 2019). Segmenting the market and customizing products by consuming money will help the company to grow well. Including catalysts will help to reduce the emissions in an environment by automobile industry volatile organic compounds will help to increase the efficiency of fuel.

Positioning- Building image automobile industry in China with complexity and following regulations in a market unknown to Korean techniques and designs tends to form a long product activity. It takes a long time for a single model to come out to many suppliers in China (Jensen et al., 2018). Eventually, to succeed in this field to make a composition of the Hyundai automobile industry in China the name of the brand should be simple and descriptive. Chinese people do not like descriptive format. It should be original as the Chinese will not regard the company if it is copied. However, it refers to the ability of a customer to recall time and again and recognize the same brand used for past years both to maintain the position of Hyundai in the China market and to explore Hyundai products. The company has to critically make awareness to the people about its strategy behind naming the brand so that the position becomes stagnant there.

PART 2

Review of International Market Expansion Strategy using Porter’s Generic Model

To expand the marrying activities, Hyundai has focused on adopting efficacious marketing strategies based on which it will be able to extend and expand its marketing activities. At the same time, it will assist the organization to internationalize the market in a significant manner (Islami et al., 2019).  In this regard, the company has focused on abiding by the necessary rules and regulations at the time of expanding its marketing that has given an extra impetus for the organization to secure a considerable amount of profitability in its regular activities. An illustration of the market expansion strategy of Hyundai using Porter’s Generic Model will be helpful to understand it in detail:

Porter’s generic model of Hyundai marketing strategy

Hyundai motor organization is one organization that aims to make effective strategies off and on to cater to the attention of a considerable number of audiences (Ryu and Jun 2019).  In this regard, there come three primary strategies under Porter’s generic model which have been used by Hyundai to make a rapid expansion of its operational activities. Below are discussed the three aspects in detail:

Cost leadership

It refers to the act of achieving a competitive advantage by reducing the cost in a significant manner. The effective usage of hie strategy makes allowance to the Hyundai Motor Organization for expanding the market share through making a target to the middle-class people. It has been observed that middle-class families tend to value the pricing factor very much where this approach will be an effective one for the organization (Philip et al., 2019). At the same time, the organization emphasizes the affordability aspect that has assisted the organization to earn a reputation across the world in a quick period. More importantly, Hyundai gives priority in maintaining an effective supply chain policy that also has attributed a lot to gain prominence accordingly.

Differentiation

This strategy helps the Hyundai organization to make stronger its customer base in the market of the country. In this respect, the organization focuses on innovation regularly that will attract the customers towards buying their products in a significant manner (Kotler et al., 2019). In this way, it aims to differentiate its products from the available other products from its competitors such as Ford, Toyota, Suzuki, Volkswagen, and several others. More importantly, the company uses its distinctive logo as an effective tool for a marketing strategy that helps a lot to earn a considerable amount of profits into regular activities.

Focus Strategy

It is the third strategy for the Hyundai organization that creates chances for the organization of pondering over the availability of resources accordingly. In this regard, the company accepts low cost by providing the best value from its customers to gain trust from them reasonably (Campling et al., 2019). Before making products, the company conducts a minute periodic analysis of the market that provides a suitable scoop to the organization to understand as well as realize the needs and demands of the customers present in the market of the country. Based on this, it aims to make effective quality products with an affordable pricing strategy to increase the amount of revenue generation accordingly.

Foreign market Entry Strategy

In this regard, Hyundai will focus on adopting joint venture strategies that will be helpful for the organization to get access to new markets considerably. At the same time, the production cost is low which is a boon for Hyundai to capture the attention of the people in the market (Yun-Tao and Jong-Ho, 2019).  However, the company has to abide by the necessary rules and regulations regularly that will generate a profitable scope to carry on the marketing activities through a joint venture in the market of China.

Contractual strategies

With the help of this strategy as well, Hyundai will be able to proliferate its marketing activities. It will create possible chances of extending the marketing activities suitably. It will be important to keep the contractual agreement cautiously that will pave the way for securing success for the organization. For a well-known organization like Hyundai, it is expected that it will not take too much time to attract customers (Kim, 2019).  The product differentiation strategy with affordable pricing will be crucial for Hyundai to draw customers successively.

Investment Strategies

In terms of marketing tactics, this strategy will aid Hyundai to make considerable inventions behind the promotion of its products in the market that will determine the profitability issue of the organization. More importantly, it will assist in providing an effective scope for Hyundai to conduct market analysis to get the idea of customer demands (Brooksbank et al., 2019). Based on the task, it will start to make innovative initiatives to boost up the income activity reasonably. It will eventually lead the organization to use innovative tactics based on which numerous opportunities will be created in the future. The political aspect will also play a crucial part that needs to be negotiated by Hyundai with prompt effectiveness.

PART 3

International Marketing Mix Program using 7PS model

Before venturing into a market, Hyundai focused on using an effective marketing mix strategy to develop an effective marketing plan. This marketing plan allows Hyundai to make necessary designs from time to time after understanding the responses coming from the people in the country where it sells its products accordingly. Below are provided the 7ps of Marketing Mix of Hyundai organization in detail:

Discussion on 7ps of Marketing Mix of Hyundai Organization
Sl no Name of the Marketing Mix Illustration
1. Product 1.     In the market, Hyundai aims to make the selling of its products in a variety of categories that offer various product lines.

2.     Since it sells a greater variety in terms of products, therefore the customers have the option to choose the best out of them leaving the rest. (Kim and Lee, 2019).

3.     The products are differentiated in nature which tends to be unique and distinguish from its competitors

4.     In terms of quality, Hyundai does not like to compromise as a result of which the customers show more willingness in buying the products.

 

2. Price 1.     It follows a competitive pricing strategy that helps the organization to enjoy a competitive advantage in the market accordingly (Kotler et al., 2019).

2.     For a few products, it considers the quantity of cost that creates a healthy score for the organization to market respectively.

3.     The organization likes to sell its products at more prices as compared to its rivals because the products offer variable features with attractive quality.

4.     At times, it uses Product Bundle Strategy where the products will be sold together at lower prices than individuals cost (Ryu and Jun 2019).

5.     Optional Pricing Strategy is also used by Hyundai where the focus of the organization is to provide different pricing for the base product and keeps the segregation of its other accessories accordingly.

3. Place 1.     At the time of selling it sprouts, Hyundai uses two distinctive marketing channels. In the first case, it sells directly to its customers via a website and in the second it sells to wholesalers who engage themselves in providing the same products to other customers.

2.     It aims to follow an intensive marketing strategy that assists the organization to be more specific in its potential gains repeatedly.

3.     The company makes significant profits through online selling of its activities that has added significant bonus in profitability (Saidani and Sudiarditha, 2019).

4.     The effective execution of the omnichannel delivery system has also aided the organizations to increase the number of customers prolifically.

5.     It has a large number of suppliers from which it gathers the essential raw materials for production. The effective relationship with the suppliers has also contributed a lot to enhance the profit generation activity of the organization.

4. Promotions 1.     For the promotion of its products, Hyundai uses multiple channels that become an advantageous aspect of the organization to reach the audiences.

2.     It provides advertisements for its products in several social media platforms (Do and Vu, 2020).

3.     In terms of sales promotion activities also, the organization believes in using innovative strategies regularly.

4.     It often requires a personal selling strategy for increasing the presence of the stores.

5. People 1.     The members of Hyundai always try to provide the best effort at the time of preparing effective products (Campling et al., 2019).

2.     Effective customer service is considered to be a positive aspect for the organization to enhance earning activity.

6. Process 1.     It always likes to assure its customers using its continuous development process (Dang, 2019).

2.     Additionally, the process helps the organization to gain the trust of the customers accordingly.

7. Physical Evidence 1.     The presence of an online website is fruitful for the organization to sell its products to all the customers throughout the country (Islami et al., 2019).

2.     It assists the organization to enhance the customer numbers accordingly.

Conclusion

Summarizing the research it can be looked upon as Hyundai tries to sustain in the Chinese Market both by providing good products and servicing well. It should be noted that Chinese people focus on social media. Hyundai must publish their products on social media so that their marketing expands online also. Hence, the case study of establishing a Hyundai manufacturing company along with the showroom is provided with all the instruments, materials, and pestle analysis. Continuous effort to bring the case study focused into a strategic one can be vividly described along with foreign market policy and diagrammatic structure. The basic purpose behind this research paper with the second largest capital country helps to understand the study well to the readers. Effective and efficient work by the Hyundai automobile company in China will let the country expand on a global level. To understand the host and the consumer’s demand helps to work accordingly. It is one of the strategic tools in the market of China where people prefer smart technology in a low cost of time. It can establish no doubt that the researcher has tried to work it’s best to complete. This is a strategy with all the data required. It has been observed that the management along with their employees is working hard to establish their company in China. Some areas will help the readers to understand optimization.

References

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Brooksbank, R., Fullerton, S., and Miller, S., 2019. Technology-based marketing strategies through the consumer lens: how might perceptions of ethicality and effectiveness interrelate?. International Journal of Technology Marketing, 13(3-4), pp.428-451.

Campling, L., Harrison, J., Richardson, B., Smith, A., and Barbu, M., 2019. South Korea’s Automotive Labour Regime, Hyundai Motors’ Global Production Network, and Trade‐Based Integration with the European Union. British Journal of Industrial Relations.

Dang, G., 2019. BRANDING STRATEGY OF THE VIETNAMESE ROASTED CASHEW NUTS, FOCUSING ON BRAND DEVELOPMENT IN VIETNAMESE MARKET.

Do, Q. and Vu, T., 2020. Understanding consumer satisfaction with railway transportation service: An application of 7Ps marketing mix. Management Science Letters, 10(6), pp.1341-1350.

Düerkop, S. and Huth, M., 2017. Transportation under Threat–A PESTLE Analysis for Critical Logistical Infrastructures. ICTA2017, p.14.

HYUNDAI MOTORS. 2020. Hyundai Motor Company Worldwide Website.. [online] Available at: <https://www.hyundai.com/worldwide/en> [Accessed 6 May 2020].

Ibeh, K., Crick, D. and Etemad, H., 2019. International marketing knowledge and international entrepreneurship in the contemporary multi speed global economy. International Marketing Review.

Islami, X., Mustafa, N., and Latkovikj, M.T., 2020. Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), p.3.

Kim, D.H., and Lee, K.H., Hyundai Motor Co, 2019. Security method and apparatus for electric vehicle power transfer system. U.S. Patent 10,404,686.

Kim, J.W., 2019. 2019 Korean Scholars of Marketing Science (Doctoral dissertation, Yonsei University).

Kotler, P., Keller, K.L., Ang, S.H., Tan, C.T. and Leong, S.M., 2018. Marketing management: an Asian perspective. Pearson.

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Kotler, P., Keller, K.L., Brady, M., Goodman, M., and Hansen, T., 2019. Marketing management. Pearson UK.

Li, Y., Lu, Y., Ma, L. and Kwak, Y.H., 2018. Evolutionary governance for mega-event projects (MEPs): A case study of the World Expo 2010 in China. Project Management Journal, 49(1), pp.57-78.

Morgan, N.A., Feng, H. and Whitler, K.A., 2018. Marketing capabilities in international marketing. Journal of International Marketing, 26(1), pp.61-95.

Petti, C., Spigarelli, F., Lv, P., and Biggeri, M., 2019. Globalization and innovation with Chinese characteristics: the case of the automotive industry. International Journal of Emerging Markets.

Philip, K., Hermann, K., and Den Huan, H., 2019. Asian Competitors: Marketing for Competitiveness in the Age of Digital Consumers. World Scientific.

Ryu, H., and Jun, S., 2019. Genesis Standing Alone as a Luxury Sedan Brand in the US Market: Barriers against the Market Performance. ASIA MARKETING JOURNAL, 21(1), pp.23-44.

Saidani, B. and Sudiarditha, I.K.R., 2019. Marketing Mix-7ps: The Effect on Customer Satisfaction. Jurnal Pendidikan Ekonomi Dan Bisnis (JPEB), 7(1), pp.72-86.

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