|Old perceptions die hard, and Kia's is that of a cheap, low-end vehicle that buyers begrudgingly settle for.
That’s exactly the problem at Kia, which has made big strides in quality, performance and styling but still suffers from the perception that it is an economy car that is hopelessly unhip, particularly among young male drivers. Even those attracted to Kia by its price and warranty are often scared off by concerns of unreliability and instead turn to its sibling brand, Hyundai.
Making Kia aspirational
“We want people to aspire to own a Kia, not settle for one,” said VP-Marketing Ian Beavis, a tough-talking turnaround artist who joined the company in May after running his own consultancy. Over his 30-year career, Mr. Beavis has worked on Ford Motor Co., Toyota, and Mitsubishi Motors North America, where he scrapped the brand’s emotional advertising campaign, calling it “a waste of money.”
Recognizing that consumers have an outdated impression of Kia, the automaker is touting two new J.D. Power & Associates awards in separate TV commercials from independent David and Goliath, Los Angeles. And it’s taking the initiative to differentiate itself from Hyundai, portraying the pair as having different driving dynamics.
Kia -- yes, Kia -- will be positioned as the sportier, more exciting brand.
“We’ve got to change the perceptions of the old Kia,” said Len Hunt, who joined the Korean automaker’s U.S. unit in October as exec VP-chief operating officer from Volkswagen of America. “We want to get people excited about the brand.” To that end, the automaker dumped its dull U.S. tagline, “Make Every Mile Count,” adopting the new global tag, “The Power to Surprise.”
But while it’s made great progress, Kia Motors America is attempting a powerful leap. Although in October it sold 236,993 units in the U.S., putting it ahead of Mazda, Saturn, Mitsubishi and Volkswagen, according to Automotive News, it has an ambitious goal of 500,000 by 2010. Moreover, Doug Scott, analyst with GFK Automotive, notes it took about a decade for Hyundai to “reverse issues with quality and price” and it takes lots of “marketing dollars to change people’s perceptions.” Kia spent $122 million in measured media in the first half of 2005.
Kia’s biggest hurdle may be persuading consumers of quality and dependability. “Kia does suffer a bit from its older image of being unreliable” despite its generous 10-year, 100,000 mile warranty, said Todd Wilson, a director of J.D. Power, who oversees the consultant’s annual “Escaped Shopper” survey. Other reasons shoppers escaped to another brand: concern about Kia’s resale value and poor treatment at the dealership.
In J.D. Power’s 2005 Longterm Dependability study, which surveys original vehicle owners after three years of ownership for problems, Kia hasn’t done much better. It ranked last and in 2004 was second from the bottom.
That’s not to say that Kia hasn’t come a long way from when it was introduced in the U.S. in 1992. Within three years, the brand sold 24,740 vehicles in the U.S., with the tally more than doubling by 1997 to 55,325 units. After completing Kia’s national rollout in the late 1990s, Hyundai acquired a controlling stake.
The early strategy was to seed the Kia name by selling 2,000 Sephia small cars to Budget Rent A Car in California, Nevada and Arizona. Advertising from Goldberg Moser O’Neill, San Francisco, touted the base-model Sephia’s $8,495 price in direct comparison to Toyota’s Corolla and Honda’s Civic. Price and durability were humorously highlighted in 1995 through 1997 ads. “We knew the only way to get people’s attention was to say we had Asian quality at a lower price,” said Jim Sanfilippo, exec VP of consultant AMCI, who spent five years at Kia starting in 1995.
Males under 30
Mr. Sanfilippo said that Kia’s problem today also goes back to awareness, noting potential buyers don’t realize its more recent models “are very strong.” That’s particularly true among males under 30 who say they’re likely to read auto enthusiast books and who favor challenging roads. That group doesn’t even put Kia on their shopping lists because the styling isn’t sporty enough, Power’s Mr. Wilson said. “Styling has always been an avoidance issue for Kia.”
Not so much anymore. J.D. Power, in fact, named Kia’s Sportage entry-level SUV and Amanti mid-sedan winners for auto performance, execution and layout in their segments, one of the awards the new advertising will crow about. The so-called APEAL awards, determined by new owners in the first 90 days, were Kia’s first.
Owners also are ranking Kia higher for vehicle quality within the first 90 days of ownership. By that measure, the brand has improved every year for the last five, said Neal Oddes, a director of Power who oversees its annual Initial Quality surveys of owners.
But even though he said Kia has “certainly made tremendous strides,” competitors have also upped their game. So the surprise is on Kia, which still ranks seventh from the bottom among 37 brands.