Several years ago, the company I worked for developed a wonderful idea for a new product. It was cutting edge, packed full of bells and whistles, and reeked of coolness. It was not just a shiny object, it was a super shiny object.
In order to justify the price premium of the product (50-100% higher than the rest of the product line) something different was going to have to be done at launch time. In fact, the original recommendation was that this product was such a premium, that it should have its own product line, and maybe even its own brand.
The executive team loved the product and everything it represented. However, when the time came to launch the product, the decision was made to give its own product line, but not a new brand.
Launching a new brand line would have required a significant investment, much more than the company was willing to make. The belief was that this product was going to be received with so much fanfare that it would help extend buzz to the rest of the portfolio of products; a “halo” product, if you will.
The product was launched with a decent amount of advertising and PR and received OK reviews from the critics. However, a few months after launch, sales were abysmal and executive support was fading fast. Advertising budgets were slashed and the sales team began to panic trying to figure out how they were going to unload all the inventory.
There were lots of theories, but one of the major factors had to be the brand umbrella that the product was lunched under. It didn’t matter that the product was premium and competed well with other premium products when the overall brand did not stand for premium. Consumers buying at that price point where not looking for a “value deal” and instead were seeking a total experience.
I can’t help but thinking of this experience when I see other brands tying to “up-market” their brand image by launching a foray into the premium space. The recent example being Hyundai with their upcoming $60,000 Equus sedan.
The reviewers are saying the car stacks up well compared to the $80k BMW and Mercedes but I would be willing to bet that buyers in that price range are not just looking at features. For premium products, the total customer experience and brand image play a very important role.
With time, money, and the development of the right experience, history shows that this can be done but it doesn’t happen over night. And very rarely is it done inside a brand framework that plays in the entry price points and premium.
Will it work for Hyundai?
It is too early to tell but one warning sign that they may not be totally committed to this effort yet is what they are doing with their buying experience. While other auto manufacturers have gone out of their way to enhance their buying experience and showrooms, Hyundai has decided not to invest for now.
Whatever happens, I am sure but it will be interesting to watch.
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