Hyundai ::: Behavioral Segmentation

How Hyundai Uses Behavioral Segmentation to Take the Bull by the Horns and Send the Bear Packing

"The Faith We Have In You"
Published on March 10, 2009

Hyundai took the bull by the horns in this bear market and scored big. It used behavioral segmentation to identify what was keeping prospects from buying and then developed a strategy that made it easier for customers to part with their hard-earned dollars.

What can you learn from its example? In every market change, even a downturn, there is an opportunity to use the power of behavioral segmentation to make your product or service stand out.

Talk to Your Target Prospects

Each news cycle brings a tsunami of information that influences your customers' purchasing decisions. The smart marketer understands that every change in the marketplace is an opportunity to capture new customers.

How do you seize that opportunity and grow your business? Relying on secondary data or past segmentations isn't a realistic option. Even in these tough times, resist the urge to repeat a smaller version of last year's marketing strategy and tactics.
Instead, use voice-of-the customer research to talk to prospects you are currently winning over as well as those whose business you would like to win. You can't overestimate the value of talking to your customers. Ask new, open-ended questions. Focus on learning:

• What their reason is for buying—how is it changing?
• What their needs are—how have they been affected by recent events?
• What's keeping them from buying?
• What do they think of your product versus the competition's product?
• What would change their perception of your product versus the competition's?
• How do they rate your product against alternative solutions?
  

Sort Findings
Take a hard look at your data and sort groups with similar characteristics to determine which segments to target.
Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren't necessarily looking for more discounts.

Armed with such customer insight, Hyundai identified a business opportunity.

Define Segment
Hyundai determined that the fear of losing one's job was a high barrier preventing prospective buyers from purchasing a car.

After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.

David Zuchowski, vice-president of national sales for Hyundai noted in a New York Times article, "It doesn't matter how many zillion dollars you put in rebates, or what APR you give them. If people are worried about their job, they don't really care and they're just not going to get off the fence."

So how did Hyundai motivate customers to move off the fence?

Develop Strategy to Target Segment

Next, Hyundai developed a strategy to ease the fears of this segment: The company's Assurance Program releases customers from car payments without harming their credit score.

As Advertising Age editor Jonah Bloom wrote, "right there, is an honest-to-goodness big marketing idea.... Hyundai confronts the recession head-on and does something tangible to tackle its effects."

With consumers demanding more for their money, more companies are cutting prices to offer the “best deal,” which can come at the expense of the bottom line and brand perception. And now, more than ever, it’s important to stand out. Maybe marketers would be better off fighting the recession with incentives that add value and provide distinct business advantages instead. Creating tangible and rational value allows consumers to spend more wisely especially in this climate of frugality.

Create Messages
Craft messages to address the specific concerns of your customers.

Hyundai advertising used straight talk that resonated with customers: "We're introducing Hyundai Assurance to show you the faith we have in you. Right now, finance or lease any new Hyundai, and if in the next year you lose your income we'll let you return it. That's the Hyundai Assurance."

Hyundai’s Assurance program — which promises to let you return a newly bought car if you get laid off.
As of early March, no Hyundai buyer had yet returned a vehicle bought under the Assurance umbrella. This raises the intriguing point about what sort of consumer is being reassured. Probably anybody who is really afraid of losing a job simply isn’t going to buy a car right now. But somebody whose insecurity is more abstract, who perhaps simply needs a rationale for a big-ticket purchase at a moment when the headlines are full of doom — that’s different



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Hyundai's Assurance Program had hit a home run. The company was one of only a few automakers to post an increase in sales.
So here's the question of the hour: Are you using behavioral segmentation to differentiate your product, reach new customers, and drive additional sales?

Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fears with an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its Instead of simply discounting its already economical line of vehicles, Hyundai is addressing consumer fearswith an innovative return policy: Hyundai Assurance. Those who finance or lease a new Hyundai can return the car for no additional charge if they lose their job within a year of purchase. The incentive has helped Hyundai distance itself from America’s Big Three automakers and increase sales 14%, nearly doubling its market share as industry-wide, new-vehicle sales fell 37% last month.

The US recession.::: marketers Vs. consumers

"a great mismatch exists between the way consumers experience and think about their world and the methods marketers use to collect this information."

During these 'bad' days marketers have to be "attentive to the emotional dynamics of peoples' lives in these times… The goal of advertising should be to engage people with a message that has an emotional impact. And that requires actually grappling with the means by which they have experiences and react with emotion, sentiment, and feeling….

By tapping into an "emot-econ" marketing mindset, Hyundai's Assurance "provides a little heart in a world that has gotten so cruel."
The Transformation (basic changes that alter life's circumstances) frame is a powerful driver: People who are worried about losing their jobs may be reluctant to buy a car. "Hynudai has taken a relevant point of communications that may not have been true a year ago, but is true today,"

And, similarly, ReMax's "Best Time to Buy/Sell" invokes a) a Journey ("The meeting of the past, present, and future") and b) Transformation: Basic changes - some desired, some involuntary - that alter life's circumstances and c) Force (events that have a powerful impact on the lives of consumers) frames by suggesting that "people will be administering strong, self-inflicted kicks down the road if they fail to take advantage of home-buying or selling opportunities now."

In the current economic conditions, "People want to know they're being respected. Their feelings have to be acknowledged."
As a point of caution, however, that brands that are insensitive to the feelings and emotions disclosed by the visual metaphors may "suffer a backlash".
The possible downside of the ReMax advertising ("it may remind people of poor decisions they made in the past coming back to kick them") as an instance where some consumers "may perceive the company to be insensitive and out of touch…. Well meaning attempts to tap into these emotions could be seen as opportunistic or patronizing that could backfire."